US flat rolled lead times extend; many prepare for ‘09

Monday, 10 November 2008 15:54:09 (GMT+3)   |  
       

US flat rolled prices declined again this week, as questions and speculation about when the market will bottom out continue.

Most domestic hot rolled coil (HRC) spot prices have declined by another $2.00 cwt. ($44 /mt or $40 /nt) since last week's report and now range from $30.00 cwt. to $33.00 cwt. ($661 /mt to $728 /mt or $600 /nt to $660 /nt) ex-mill in the Midwest. This price decrease brings HRC spot prices closer to Nucor's average contract price, which is now in the range of $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt). In fact, SteelOrbis has heard that some special spot deals may currently be possible at this range.

Domestic cold rolled coil (CRC) spot offers have also fallen by about another $2.00 cwt. ($44 /mt or $40 /nt) from our report last week and most offers are now in the range of $36.00 cwt. to $39.00 cwt. ($794 /mt to $860 /mt or $720 /nt to $780 /nt).

While prices are still decreasing across the board, many industry professionals are glad to see October come to a close. Most steel businesses, and service centers in particular, experienced their worst month in a long time in October 2008. Some that have large inventory positions and weak financial standing may not be able to even make it through the end of the year and will be forced to close down their operations. One steel buyer told SteelOrbis, "Everyone who has even a pound of steel right now has more than they want." 

Although this fast and furious race towards the bottom may be nearing an end after falling more than $25.00 cwt. on average, flat rolled products' price downside risk for buyers continues to become less and less. With production cuts from most mills, and busheling scrap prices down to only about $140 /lt, buyers have a lot less to lose if they act too soon than they did a couple of months or weeks ago. Concern could be slowly shifting to developing holes in inventories, as the lead times are increasing due to massive production cuts. Mills are getting ready to close their order books for late December 2008 deliveries. 

As things slowly seem to be bottoming out, import offers too are beginning to attract some attention.

China's CRC offers are in the range of about $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760 /nt) duty-paid, FOB loaded truck in US Gulf or West Coast ports. This represents a decrease of $2.00 cwt. ($44 /mt or $40 /nt) since last week.

As the world's leading steel producers rush to cut production, China's next move is highly anticipated. If China doesn't cut any production as well, they will be forced to export massive quantities to different regions, primarily to North America. And as trade tensions are about to rise up again, some steelmakers already want the new administration to pay attention to steel imports. 

Russia still appears to be offering the most competitive HRC prices comparable to domestic prices, in the range of $28.00 cwt. to $31.00 cwt. ($617 /mt to $683 /mt or $560 /nt to $620 /nt), duty-paid FOB loaded truck in US Gulf ports, a decrease of $1.00 cwt on average.

Mexico continues its "Let's make a deal" mentality with their available capacity, although they are showing signs of being less apt to take just anything that is proposed. Mexico is offering HRC to the US at the border crossing in the range of $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt) and is offering CRC in the range of $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760 /nt). 

Brazil is showing some signs of activity, with CRC offers also in the range of $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760 /nt) duty-paid, FOB loaded truck in US Gulf ports, and higher.  

Census Data from the US Steel Import Monitoring and Analysis System (SIMA) show that total tonnages of import HRC arriving in the US during September were 234,656 mt, which is 28,625 mt more than the 206,031 mt imported in August. The largest quantities of import HRC in the September period came from: Australia, at 68,339 mt; Canada, at 62,821 mt; South Korea, at 60,625 mt; and Netherlands, at 14,956 mt. Other HRC sources during this period included Mexico and Russia.

Total tonnages of import CRC arriving in the US during September were 81,486 mt, which is 22,308 mt more than the 59,178 mt imported in August. The largest quantities of import CRC in the September period came from: China, at 28,512 mt; Canada, at 19,299 mt; and South Korea, at 10,721 mt. Smaller CRC import sources during this period included Japan, Netherlands, Mexico, and Taiwan.


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