US domestic flats prices trending up, buyers remain cautious

US domestic flat-rolled spot prices have increased in the last week, but buyers continue to only make small, as-needed purchases.

After all major US domestic flats mills sent letters to customers about two weeks ago raising flat-rolled spot prices $3.00 cwt. ($66/mt or $60/nt), most mills still allowed buyers to place last-minute orders at pre-increase levels. However, in the last week, mills have been more adamant about collecting at least part of the increase. Asking prices are currently about $35.00 cwt. ($772/mt or $700/nt) ex-Midwest mill for hot rolled coil (HRC) and approximately $40.00 cwt. ($882/mt or $800/nt) ex-Midwest mill for cold rolled coil (CRC), but spot prices are still well below. Domestic HRC spot prices are in the range of $32.00-$34.00 cwt. ($705-$750/mt or $640-$680/nt) ex-Midwest mill, while CRC spot prices are between $37.00-$39.00 cwt. ($816-$860/mt or $740-$780/nt) ex-Midwest mill--both up $1.00 cwt. ($22/mt or $20/nt) in the last week.

Nonetheless, domestic spot prices are poised to continue rising in the next couple weeks as mills "have been pushing for higher prices a little harder every day," according to one Gulf area distributor. Additionally, sources tell SteelOrbis that throughout this past week, mills have been informing customers that another price increase (for about $2.00 cwt. ($44/mt or $40/nt)) is imminent--likely a means to push through the first $3.00 cwt. increase.

The price increase announcements have essentially put a floor on domestic spot prices and given buyers the confidence to place orders with the assurance that prices won't fall by the time the steel arrives. Even so, few are willing to place large orders or stock inventories considering that two of the foremost market dynamics that pushed spot prices down in the first place from April through August--overcapacity and high domestic production rates--have not changed.

Furthermore, buyer sources tell SteelOrbis that they are still working through high levels of import inventory, therefore finding no need to place big orders from their local mill. US Steel Import Monitoring and Analysis (SIMA) data show 292,999 mt (preliminary census data) of hot rolled sheet arriving in July, a 42 percent surge over June imports and the highest level in over two years. Cold rolled sheet imports were 102,700 mt in July compared to 94,900 mt in June (census data). In the meantime, futures activity is minimal and with the exception of a few sporadic orders being placed, current import prices are much too high for US buyers to consider.

**DDP loaded truck in US Gulf ports