While price upticks have remained consistent throughout the first four months of 2010, it seems that for now, at least, that the steam behind these continued increases has fallen flat.
A number of buyers for hot rolled coil (HRC) and cold rolled coil (CRC) have already begun to question whether mills will be able to maintain current (or perhaps additional) price increases, or if with additional capacity coming back on line, a correction might start to take place. While mills are not running at full steam (thus exerting some control over output tonnages), ThyssenKrupp's Calvert, Alabama-based mill will be coming on line at the end of next month. And considering the ThyssenKrupp mill has a total annual flats capacity of 4.2 million mt (4.6 million nt), unless demand spikes significantly, or exports experience a massive uptick, increased price-softening within these product lines could very well begin to take place.
On the opposite side of that coin, though, remains low inventory levels, which leads others to believe that spot pricing could hold at current levels and trend neutral for the next few weeks. But again, inventory levels might not be low enough to support the additional tonnage. For now, at least, spot-pricing has begun to soften slightly, and transaction ranges have widened by approximately $1.00 cwt. ($22/mt or $20/nt), with deals below pricing levels reported last week now becoming more prevalent.
Current domestic spot pricing for HRC is now being reported in the approximate range of $34.00 cwt. to $36.00 cwt. ($750/mt to $794/mt or $680/nt to $720/nt) ex-Midwest mills; while CRC is now being offered at around $39.00 cwt. to $41.00 cwt. ($860/mt to $904/mt or $780/nt to $820/nt) ex-Midwest mills.
Mexican HRC, though has remained neutral since last week and continues to be seen in the approximate range of $35.00 cwt. to $36.00 cwt. ($772/mt to $794/mt or $800/nt to $720/nt) delivered to US border states.
As far as offshore imports, offers are eerily quiet. While it's been rumored that there may be some CRC available to the US out of Russia, the pricing models are far too high to garner interest. Chinese offers, however, are expected to reemerge within the next week or so, but it is anticipated that Chinese offerings will also be priced higher than US domestics.
Data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that the total import tonnage of HRC has decreased from 192,845 mt (preliminary census data) in March to 171,690 mt (license data) in April. The only significant offshore importers for HRC were Korea, at 29,343 mt; and Australia, at 23,358 mt.
Further, SIMA data also demonstrates that the total import tonnage of CRC has decreased from 65,351 mt (preliminary census data) in March to 63,953 mt (license data) in April, with Korea being the only significant offshore importer, at 13,594 mt.