The uptrend in the US domestic flats market appears to have hit a wall, and mills may soon lose their grip on spot prices.
With US domestic mill production rates continuing to edge up on an almost week-on-week basis (up 0.8 percent in each of the last two weeks), and no change to domestic demand levels, the slightly amplified buying activity that followed two announced mill increases last month that totaled $5.00 cwt. ($110/mt or $100/nt) has dissipated. As a result, domestic lead times have shrunk to about two weeks on hot rolled coil (HRC) and four weeks on cold rolled coil (CRC)--both down about one week since mid-September as flats mills have once again become hungry for orders.
Consequently, domestic HRC spot prices in the range of $33.00-$35.00 cwt. ($728-$772/mt or $660-$700/nt) ex-Midwest mill may begin to slip unless demand (and in turn buying activity) picks up, or some production is taken out of the marketplace. If HRC spot prices do falter, CRC spot prices, currently $39.00-$41.00 cwt. ($860-$904/mt or $780-$820/nt) ex-Midwest mill will follow suit.
According to industry insiders, while demand is steady, it is still less than many service center buyers anticipated for September, and so inventory stocks are lasting longer than expected. Looking back, recent data from the Metals Service Center Institute (MSCI) indicate that US flat-rolled steel inventories fell from 2.6 months-on-hand in July to 2.2 months-on-hand in August, and data for September may not be much different.
On the import side, Mexican HRC offer prices to the US and Chinese CRC prices for the US have once again stayed neutral and continue not to be a factor in the US market. "This week has been the slowest booking week we've had all year," one trader told SteelOrbis. And slow import activity since May/June is being reflected in US Steel Import Monitoring and Analysis (SIMA) data: 167,870 mt (license data) of imported hot rolled sheet arrived in the US in August, compared to 293,509 mt (census data) in July. Cold rolled sheet imports into the US are down as well, totaling 82,033 mt in August compared to 102,418 mt in July. As for the current month, 103,830 mt of hot rolled sheet, and 60,248 mt of cold rolled sheet has arrived into the US as of September 20.
| Cwt. | Metric Ton (mt) | Net ton (nt) | Change from last week | |
| US domestic | ||||
| HRC | $33.00-$35.00 | $728-$772 | $660-$700 | neutral |
| CRC | $39.00-$41.00 | $860-$904 | $780-$820 | neutral |
| Mexico* | ||||
| HRC | $34.00-$35.00 | $750-$772 | $680-$700 | neutral |
| China** | ||||
| CRC | $42.00-$43.00 | $926-$948 | $840-$860 | neutral |
**DDP loaded truck in US Gulf ports