US flat rolled market – Market calming down but no sharp drop in sight

Friday, 30 June 2006 03:24:01 (GMT+3)   |  
       

Market players are not so bullish about the flat rolled market anymore, but there are no dire predictions of cataclysmic fallout either. The general expectation is that flat rolled prices may fall slightly by the end of the year, though we certainly haven't seen any drop in prices just yet. In fact, to some surprise, domestic producers have announced an August price increase of $20 /nt. There is some concern that demand isn't strong enough to support another increase, however, from an economic perspective, demand still appears to be fairly strong. Though the housing market has slowed down a bit, construction is still strong. The automotive sector is in a better place than it was in last year, and alloy prices are still soaring, keeping galvanized and stainless sheet prices up. Also, despite increasing inventories, shipments are up as well, actually decreasing the months-on-hand supply for many domestic distributors. Still, since consumers are already grumbling about the higher-priced offers, the pricing trend is now only slightly up, and the market may not accept the entire (or any of) $20 /nt increase. For now, domestic hot rolled offers still range from $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt). Cold rolled offers range from $35.50 cwt. to $36.50 cwt. ($783 /mt to $805 /mt or $710 /nt to $730 /nt). As far as the Mittal/Arcelor merger's effect on flat rolled business, it is not expected to much of an effect on pricing just yet, but we will start to see more consolidation in the industry as smaller companies band together to combat this new giant. In the long run, this kind of consolidation in the industry, now a growing trend, will probably firm prices up. On the import side of the market, the pricing trend is now neutral as import prices are still too close to domestic offers to be very competitive. Taking into account the comparable prices and long lead times for imports, many buyers will opt to buy domestic instead, unless the import supplier is able to provide immediate availability. Current offers for import hot rolled range from about $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB loaded truck, US Gulf ports. Cold rolled imports range from $34.50 cwt. to $35.50 cwt. ($761 /mt to $783 /mt or $690 /nt to $710 /nt) FOB loaded truck, US Gulf and New England ports.

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