The domestic flat rolled market has not entirely recovered from its slump in demand. However, prices have bottomed out and are ready to rise again as market players have become more optimistic about the market in the past two weeks.
Domestic mills are ramping up
production and increasing prices in anticipation of a second quarter turnaround.
US Steel has restarted two of its blast furnaces and both
Nucor and AK Steel have announced price increases for March shipments. But demand hasn't improved much and inventories are still high. So are the mills jumping the gun with these preemptive moves?
Well, while service center inventories still have a four to five month supply as demand stands now, the amount of flat rolled imports coming in has vastly decreased in the past two months, and domestic
production is still not at full capacity. Therefore, market players still expect inventories to be depleted by the end of the quarter, and that the market will accept the price increases. This week's $30 -$40 /long ton increase in busheling
scrap prices will also help to push up prices. Flat rolled demand is still not particularly strong, but the pricing trend is now slightly up because of the supply and raw material cost factors.
Hot rolled market players say that in light of the announced increases, the $25.00 cwt. ($551 /mt or $500 /nt) offers for hot rolled are quickly disappearing, with most offers now ranging from $25.50 to $27.50 cwt. ($562 /mt to $606 /mt or $510 /nt to $550 /nt) FOB mill, an increase of $0.50 cwt. ($11/ mt or $10 /nt) in the past two weeks.
Demand for cold rolled coils remains slightly less than demand for hot rolled with one cold rolled trader telling SteelOrbis this week that demand for
CRC in the US is “as flat as a pancake.” However, even cold rolled prices are expected to increase significantly by the second quarter due to the aforementioned supply issues. For now, most cold rolled offers still range from $30.50 to $32.50 ($672 /mt to $717 /mt or $610 /nt to $650 /nt) FOB mill. Large tonnage buyers are able to get offers priced about $1.00 cwt. ($22 /mt or $20 /nt) below this range.
The pricing trend for import flat rolled is now on the rise; due to the red-hot world market for flat rolled very few imports are coming into the US, and prices will go up considerably as the US gets hungrier. Chinese domestic cold rolled tags are still going up, and
Russia's domestic flat rolled market is on fire. Demand in
Europe and Latin America is also very strong. Therefore, these usual import sources have not been shipping much to the US in the last couple months.
Nucor is even discussing the option of exporting since the other world markets are so attractive.
Import hot rolled traders say that Russian mills are currently the only hot rolled exporters offering any tonnage to the US right now and that these offers are at a range of $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) FOB loaded truck, in US Gulf ports, an increase of $2.00 cwt. ($44 /mt or $40 /nt) since our last report.
Cold rolled coil imports still range from $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt) FOB loaded-truck in US Gulf and West Coast ports.
China and
Brazil are the main countries offering. Some Mexican offers are around as well and are the lowest priced of the bunch. Still, imports are limited as most exporting mills are focusing on regions with a better profit margin.