The US flat rolled market has continued to weaken, as demand has fallen off significantly, causing prices to soften.
Although US flat rolled producers announced September price hikes in early August, they were later forced to rescind them due to the weakening demand and lack of orders. According to buyers, mills' order books are far from full for September, and mills are graciously cutting prices for customers just to get some orders. A buyer told SteelOrbis, "One of the big mills called me up asking me for tonnage and I could basically name my price (within reason of course)."
The gap between domestic mills' official list prices and actual transaction prices has been widening, and even with mills rescinding their earlier increases, the gap appears to be growing and tonnage can be purchased for lower and lower numbers every week. The market psychology right now seems to be, "Why buy now?" Buyers know that next week will bring lower numbers, so they see no reason to buy now at the high prices and are instead waiting to put in their orders until they absolutely have to.
Domestic hot rolled coil (HRC) prices are on the decline, with spot prices falling approximately $2.00 cwt. ($44 /mt or $40 /nt) in the last week. HRC prices are in the range of $51.00 cwt. to $53.00 cwt. ($1,124 /mt to $1,168 /mt or $1,020 /nt to $1,060 /nt) ex-mill Midwest, though some customers tell SteelOrbis that they are finding HRC priced below $50.00 cwt. ($1,102 /mt or $1,000 /nt). The pricing trend is slightly down, as prices are expected to continue inching down in the weeks to follow.
On the cold rolled coil (CRC) side, business is slower, and the market is, overall, much softer than the HRC market. More and more contract tons have been making their way into the market at lower numbers than the mills' offering price, thereby lowering the accepted price range for CRC. For CRC, spot prices are as low as $53.00 cwt. to $55.00 cwt. ($1,168 /mt to $1,213 /mt or $1,060 /nt to $1,100 /nt) ex-mill Midwest, with prices expected to continue trending slightly downwards.
In general, the US economy is still not faring too well, and it seems that the economic slowdown has finally caught up with steel prices. Business was said to be OK up through July, and then, seemingly all of a sudden, in August, everything began trailing off. Going forward, at least in the short term, no up-tick in demand is expected, and prices are expected to continue trending downwards.
On the import side, Chinese mills have been aggressively cutting prices in an attempt to get more bookings from US customers. In this market, instead of putting out firm offers, offshore mills have been asking their customers for bids before giving an offering price to get a better idea of what buyers are willing to pay.
Realistically, traders have to offer Chinese CRC at significantly below the domestic price to get any traction from buyers, especially since the domestic market is trending down, and offshore material will not be arriving in the US until December.
Not leaving much room for traders' profit, Chinese CRC offers are in the range of $53.00 cwt. to $55.00 cwt. ($1,168 /mt to $1,213 /mt or $1,060 /nt to $1,100 /nt) FOB loaded truck, West Coast ports. Import prices are expected to keep trending down along with domestic numbers.