US flat rolled prices climb while import offers withdrawn

In the first week after the Thanksgiving holiday it became quickly apparent that US flat rolled mills' January price increases are likely to stick.

While most mills announced January increases of a minimum $1.00 cwt. to $1.50 cwt. ($22/mt to $33/mt or $20/nt to $30/nt), Severstal's North American unit provided specific list prices for its products for January and February, reflecting a $1.50 cwt. ($33/mt or $30/nt) hike for each month. It appears to be a little too soon to expect all customers to pay the full increase for January orders but the spot trend is already up by about $1.00 cwt. ($22/mt or $20/nt) on all products from last week.

As a result of the announced increases, most domestic spot offers for US hot rolled coils (HRC) now range from approximately $25.00 cwt. to $27.00 cwt. ($551/mt to $595/mt or $500/nt to $540/nt) ex-Midwest mills, most cold rolled coil (CRC) spot prices are now offered at around $30.00 cwt. to $32.00 cwt. ($661/mt to $705/mt or $600/nt to $640/nt) ex-Midwest mills, hot-dipped galvanized (HDG) base prices  are mostly at $31.00 cwt. to $33.00 cwt. ($683/mt to $728/mt or $620/nt to $660/nt) ex-Midwest mills, while offers of 0.019" x 48" G90 (0.48 mm x 1.219 m) and 0.012" x 40.875" G30 (0.30 mm x 1.04 m) both generally range from $42.00 cwt. to $44.00 cwt. ($926/mt to $970/mt or $840/nt to $880/nt) ex-mill, and the majority of Galvalume base prices can be found for around $32.00 cwt. to $34.00 cwt. ($705/mt to $750/mt or $640/nt to $680/nt) ex-Midwest mills.

Some spot deals are being conducted at a little below or above these ranges as mills are still feeling out the degree of firmness for their January and February books. Regardless, spot deals are expected to climb a little higher over the next week or two to fulfill the $1.50 cwt. ($33/mt or $30/nt) January increase. However, it is uncertain whether flat rolled prices will keep their momentum into February and if other producers will follow Severstal with an additional hike for the month. Many distributors believe that while January increases will stimulate bookings for customers who need to replenish their inventories, the increase in activity will not necessarily reflect an increase in end-user demand. Once inventories are replenished to acceptable levels, activity could stop again, leaving prices vulnerable to another downturn.

Offshore mills are also closely watching the US market. Since most of their lead times are already into March and April, they have been feeling out the market to see if they can potentially capitalize on the full $3.00 cwt. ($66/mt or $60/nt) in increases announced by Severstal for January and February combined. Some could argue that domestic prices might raise even higher heading into March. However, most buyers are not willing to take that risk right now as the market remains too volatile. So, offshore sources have taken most of their offers off the table right now and are still trying to feel out the market before they make their next price move. Most traders believe that while Asian suppliers of CRC and HDG would like to eventually go for the full $3.00 cwt., right now, they are more likely to announce a $1.00 cwt. to $1.50 cwt. ($22/mt to $33/mt or $20/nt to $30/nt) increase over the next week.

Furthermore, wherever import offers end up after a price increase, they will be less competitive than they already are. Therefore, any import price moves should not have a big impact on the market and the market will continue to be dominated by domestic producers.