Pricing ticks up a notch for US domestic hot and cold rolled

Although some continue to question whether Severstal NA, Nucor Sheet Mill, and AK Steel will be able to obtain the full increases they're shooting for--$1.50 cwt. to $2.00 cwt. ($33/mt to $44/mt or $30/nt to $40/nt)-prices have in fact, on average, ticked up since our last report a week ago. West Coast-based USS Posco has also since rolled out a $40/nt increase for CRC, further leading to speculation that things might just be looking up for the flats market.

Last week's increase announcements may very well have been the booster-shot of confidence the domestic market needed, as order activity by service centers resumed almost immediately.   Does this mean mills' order-books are overflowing?  Not exactly.  But a number of fence-sitters have since begun restocking low inventories, with the idea that they may be able to beat a potential up-swinging curve for product cost.

Increases in domestic transaction pricing could also be good news for traders, many of whom placed overseas orders for HRC in April when spot pricing in the US was still on the rise.  According to the most recent data released by the US Department of Commerce Import Administration, total HRC import tonnages to the US for the month of July were reported at 201,401 mt (license data)-  reflecting the largest month for HRC imports in more than a year. 

The million dollar question, though, is whether this will be a new overall trend for the market, or if it's indicative of the cycle seen at the end of spring, where a number of orders were placed only to be followed by two months of stagnant activity.  For now, however, although the trend has shifted to an upward direction, only time will tell if the recent uptick will sustain for the long term.

Looking south of the border and to the Far East, Mexican HRC and CRC has ticked up $1.00 cwt. ($22/mt or $20/nt), although CRC offerings out of China have remained neutral. However, the expectation is that both countries will be keeping a close watch on the US domestic market before announcing further modifications to their respective offer pricing.