US domestic flats buyers living on a prayer

Previously announced $40/nt price increases led to a bit of fear-factor buying, where buyers met mills at a $20/nt increase midpoint.  But with recently reported slippage (with people who had previously paid an additional $20/nt for HRC/CRC now reporting they can buy $10/nt cheaper), questions as to whether the increase will last have begun to run rampant.

"Mills are desperate for business," commented one purchasing manager.  "Yet still, no one is giving any indication that they'll be cutting production back.  And the market just isn't ready to absorb this type of volume," he said, further pointing out that HRC could be obtained in just three weeks (sooner, in some cases), while CRC can be booked and delivered in four weeks or less.

The general word on the street is that buyers have since resumed a position of not buying, because while several placed orders a few weeks ago with the anticipation that prices were going up, fears that things are beginning to slip solidly in the other direction are becoming more prevalent.   Compound that with the "What will it take to get an order" sales tactics being utilized by some mill salespeople, and well,  it's safe to say that service centers are (and rightfully so), a bit more skittish in spending their dollars than they were two weeks ago.

For now, the forecast for HRC and CRC will remain neutral, as buyers try to ascertain if 1) the anticipated August 27 price increase announcement will be released (or if it'll be pushed back a week), and 2) if it is- what, if any, real impact it will have on transaction pricing.   One thing though, is certain:  the anticipated increase announcement doesn't have anyone scared enough to place orders.

"Unless a tornado whips through and tears out the US Gary Indiana plant and takes all the inventory with it, there's going to be no fear-induced buying," commented another distributor.

Looking south of the border, Mexican HRC has remained neutral since our last report a week ago, although Mexican CRC offerings seem to have completely fallen off the map.   China, however, has retained neutral offer pricing, yet not many people are excited to invest in more expensive imports that won't arrive until December when they can purchase less expensive domestic and have it delivered in a month.  Rumors that Brazil is aggressively importing into the domestic market are becoming ever present, with the expectation that a marked jump in Brazilian import tonnages for CRC will be seen in November.  Turkey has also been heard to be offering HRC and CRC to the US, although exact offer pricing was unable to be confirmed. 

*Mexican offers are FOB loaded truck US border states.

**Chinese offerings are duty-paid FOB loaded truck, US Gulf ports.