The US flat rolled market continues trending upward despite the soft end-use demand, as spot offers are inching closer to reaching the high end of the second wave of new transaction prices announced last month.
US hot rolled coil (HRC) spot prices have increased by about another $0.50 cwt. ($11 /mt or $10 /nt) over the past week, bringing the offered range to approximately $21.50 cwt. to $23.00 cwt. ($474 /mt to $507 /mt or $430 /nt to $460 /nt) ex-mill in the Midwest, with the majority of booked business floating somewhere in the middle.
Meanwhile, US cold rolled coil (CRC) spot prices have increased by around $1.00 cwt. ($22 /mt or $20 /nt) since last week, with most CRC spot offers ranging from approximately $27.00 cwt. to $28.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) ex-mill in the Midwest.
There was some skepticism surrounding the viability of domestic flats mills' recent increases for July and August bookings, which total over $3.00 cwt. ($66 /mt or $60 /nt), as demand levels that have not improved much in recent weeks, with the exception of a little seasonal up-tick. However, while still trying to negotiate here and there, buyers have, on the whole, begun purchasing material at these increased rates. Moreover, domestic mills are close to filling up August books already, with an eye towards closing the third quarter strong, comparatively speaking.
In order to make sure the August price increases stick, domestic mills are expected to try to hike prices further, by about $2.00 cwt. ($44 /mt or $40 /nt) or more, for September orders. This would ultimately push transaction offers up to about $26.00 cwt. ($573 /mt or $520 /nt) on HRC and $30.00 cwt. ($661 /mt or $600 /nt) on CRC, ex-mill in the Midwest.
Furthermore, US busheling scrap prices are expected to rise in July. There is still some uncertainty; however, as to whether US flat rolled prices will be able to continue increasing for the duration of the year, especially if demand does not significantly improve. Nonetheless, US flat rolled producers are taking advantage of the positive momentum for the time being.
Meanwhile, the import market remains extremely quiet. Many foreign sources are either filling their books domestically and simply cannot compete with US mills on price or lead times. Most are content to wait for US domestic prices to increase further, allowing them to establish a higher base, before re-entering the market.
Traders continue to report to SteelOrbis that there are virtually no HRC import offers to be seen or heard. Foreign sources may try to get back in the game and offer HRC to the US if domestic rates continue to increase, but even then, buyers will probably remain too skeptical about the future of the market to commit to import product.
On the CRC side, import offers to the US have also become scarce. While Chinese CRC offers continue to range from approximately $28.00 cwt. to $30.00 cwt. ($617 /mt to $661 /mt or $560 /nt to $600 /nt) duty-paid, FOB loaded truck in US Gulf ports and Brazilian offers can still most likely be found for around $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) duty-paid, FOB loaded truck in US Gulf ports, Korea has been a little more active, offering CRC at about $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) duty-paid, FOB loaded truck in West Coast ports. However, these ranges are too high to generate legitimate interest and import lead times are a couple months further out than those of domestic mills.
Furthermore, license data from the US Department of Commerce show that HRC exports to the US decreased for the fourth consecutive month in June, totaling about 85,062 mt, down from 100,106 mt in May. While Canadian, Mexican and Australian HRC imports all increased from May, to 37,430 mt, 14,923 mt and 12,523 mt, respectively, in June, Korean imports decreased drastically, from 29,269 mt in May to only about 7,421 mt in June.
Meanwhile, license data on CRC imports also demonstrates a fourth consecutive monthly decline in June, totaling 40,811 mt, down from 57,517 mt in May. The top five CRC import sources for the US in June were: Canada, at 11,950 mt; Brazil, at 4,426 mt; Mexico, at 4,227 mt; Netherlands, at 3,967mt; and United Kingdom, at 3,432 mt.