US flat rolled market trying to hold firm as momentum slows

While it appears that US flat rolled mills have accepted that their attempted November price hikes likely won't come to fruition, they are doing their best to keep prices from eroding.

Spot prices on hot rolled coil (HRC) and cold rolled coil (CRC) have been soft for several weeks, and have declined by about $1.00 cwt. to $2.00 cwt. ($22 /mt to $44 /mt or $20 /nt to $40 /nt) since the end of August. However, most spot offers have remained neutral since last week, even as the holiday season inches closer.

Most domestic HRC spot offers are ranging from approximately $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) ex-Midwest mills; however, the majority of offers are right around the $27.00 cwt. mark. There have been rumors that customers with sizable tonnage may see offers below this range, to as low as $26.00 cwt. ($573 /mt or $520 /nt), but this has yet to be confirmed. The HRC market remains the weakest of all flat rolled coils, mostly due to the downfall of the plate and tubing markets; however, domestic mills have tried their best so far to avoid offering significant discounts across the board.

Meanwhile, CRC has arguably become the best flat rolled coil market. CRC benefited from hot dipped galvanized (HDG) offers being in high demand throughout most of the summer and through the end of Q3. Nevertheless, most CRC offers decreased by about $1.00 cwt. ($22 /mt or $20 /nt) over the past week and are now ranging from around $32.00 cwt to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) ex-Midwest mills.

Domestic buyers will remain cautious throughout the rest of the year, looking for some small pockets here and there to take advantage of. But overall, domestic mills will likely try to keep prices as firm as possible, while activity is expected to remain slow until at least the end of Q1 2010.

On the import side, most HRC and CRC offers have remained quiet; however, more offshore sources are expected to become more aggressive in the coming weeks. HRC offers from Mexico have remained neutral from last week but continue to be the most viable option to the US at about $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) delivered to the border crossing. Regarding offshore HRC, Russia is offering at around $27.00 cwt. ($595 /mt or $540 /nt) duty-paid, FOB loaded truck in US Gulf ports.

While most import CRC offers have not changed since last week, Asian offers, most notably from China and India, are expected to start coming down from current levels, over the next week or so. In the meantime, Chinese and Indian offers continue to be at $35.00 cwt. ($772 /mt or $700 /nt) duty-paid, FOB loaded truck in US Gulf ports, and higher, while Brazilian offers remain at around $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) duty-paid, FOB loaded truck in US Gulf ports, and Mexican offers remain in the range of $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) delivered to the border crossing.

Preliminary license data from the US Department of Commerce demonstrate that HRC exports to the US increased for the third consecutive month in September, from 121,466 mt (census data) in August up to 161,612 mt: the most imported monthly tonnage since October 2008. The top four importers of HRC in September were Canada, at 66,050 mt; Korea, at 25,679 mt, Netherlands, at 24,485 mt; and Japan, at 23,076 mt.

Regarding CRC exports to the US, preliminary license data indicates that monthly tonnage increased for the second consecutive month in September, from 59,637 mt (census data) in August to 73,955 mt. The top five exporters of CRC tonnage to the US in September were Brazil, at 28,356 mt; Canada, at 18,064; Mexico, at 8,035 mt; Netherlands, at 6,388 mt; and Japan, at 4,623 mt.