No change in direction was observed in the US flat rolled market over the past few weeks, and one can't help but notice that the expected March/April turnaround is still not taking place in a big way.
The pricing trend for domestic flat rolled products is still slightly up, as prices are expected to rise at least slightly to reflect the mills' announced May increases. However, as market sources told SteelOrbis this week, Nucor has given up on trying to get the full $60 /nt increase for May shipments and will likely settle for a $30 /nt to $40 /nt increase from April prices. However, May and even June booking is already underway, and only about $20 /nt of the increase has taken hold so far. Prices have not changed noticeably in the past two weeks.
Domestic hot rolled coil offers still range from $28.50 cwt. to $30.50 cwt. ($628 /mt to $672 /mt or $570 /nt to $610 /nt) FOB mill. Cold rolled coil offers range from $32.00 cwt. to $34.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt) FOB mill.
Demand for flat rolled products is still very lukewarm in the US. The automotive sector is still in recession, and while vehicle production is still decent, domestic auto makers are having to give big discounts in order to sell vehicles, indicating that demand is still weak. The flat rolled market is also largely affected by the slowdown in the housing industry, which in turn has caused a slowdown in the appliance industry. It has been suggested that the weak housing market may be the number one culprit for weak steel demand in the US. Weather is starting to warm up across the country, which should spur the non-residential construction market; however, buying still isn't coming into full swing as was expected at the beginning of the year. Service centers are still only buying what they need, as demand has not bounced back yet and there is a possibility that prices may have even peaked already.
On the bright side, recent data from the Metals Service Center Institute show that while US steel service center inventories at the end of March were still 10 percent higher than they were a year ago, inventories were at 14.8 million tons at the end of March, down from 15.8 million tons at the end of February. At the current rate of shipping, steel-on-hand supplies at the end of March represented a supply of 3.1 months, down from 3.7 months in February. Therefore, some inventory correction is occurring, slow as it may be.
Also, while flat rolled imports were up slightly in March as compared to the previous month, these numbers were significantly down from March 2006 and still remain at a relatively low level. Data from the US import administration show that hot rolled coil imports to the US totaled 232,200 mt in March, compared to 180,000 mt in February and compared to 448,700 mt in March 2006. HRC imports in April are also relatively low, at 181,100 mt as of April 24. Cold rolled coil imports in March totaled 144,300 mt, up slightly from 139,700 mt in February, and down significantly from 257,400 mt in March 2006. Cold rolled coil imports for the month of April total only 86,800 as of April 24.
Import flat rolled traders report that they are very inactive as import buying activity remains slow. Flat rolled prices in Europe and the Middle East are far more attractive to foreign mills than US prices. Perhaps with the help of the weak US dollar, many US flat rolled producers such as Arcelor Mittal USA and Nucor are now actively exporting flat rolled products to Europe. Export prices are at the same level as the best US domestic prices, or slightly under them.
Flat rolled imports continue to trickle in from countries such as Korea and Australia for hot rolled, and Brazil for cold rolled, but are still significantly down when compared to 2006 levels and are not likely to pick up anytime soon.
Import offering prices are still in the same range as we last reported, with most hot rolled coil offers still ranging from $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt) FOB loaded truck in US Gulf ports, while cold rolled offers range from $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt $660 /nt to $700 /nt) for FOB loaded-truck in US Gulf and West Coast ports.