Hot dip
galvanized (HDG) import offers for the US have held steady since last week, while US domestic prices have edged further downwards as the intense competition between American flat rolled producers draws on.
The US flat rolled market remains, by and large, a domestic game, with minimills continuing to offer ever-lower prices and integrated producers following the minimills' lead.
Nucor, in particular, continues to lower its prices as it strives to find a balance between matching
production to demand, and keeping
production up because of the tonnage-based mechanism the company uses to compensate its employees. While this business model may not be sustainable for a long period of time,
Nucor's top competition, namely, fellow flat rolled minimills
Severstal and Steel Dynamics Inc., have no choice but to match or beat their competitors' lower prices if they want to get any business. Therefore, domestic flat rolled prices continue to trend downwards.
While US base prices for HDG have remained steady since last week at a range of $23.00 cwt. to $25.00 cwt. ($507 /mt to $551 /mt or $460 /nt to $500 /nt), mills continue to cut extras, causing spot prices for both 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) to drop by $1.00 cwt. ($22 /mt or $20 /nt) since last week. The domestic 0.019” G90 price now ranges from $31.00 cwt. to $33.00 cwt. ($683 /mt to $728 /mt or $620 /nt to $660 /nt) ex-Midwest mills, and 0.012” G30 offers now range from $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) ex-Midwest mills.
Besides keeping prices low, US flat rolled mills are also employing other measures to usurp business from each other and from offshore mills, like offering rarer items, such as light gauge HDG, that domestic mills typically didn't want to produce in the past and instead let the import market handle. But now, as US mills are struggling dearly to fill their order books, they are producing more niche items and offering them competitively. A trader told SteelOrbis this week that a certain US minimill was offering 0.012” G30 coils for June delivery at a cheaper price than he can get from
India for August/September delivery.
Scrap prices are expected to rise modestly in May, which could potentially spur US flat rolled steelmakers to raise prices and finally put an end the downward price spiral. However, without an up-tick in demand, it seems unlikely that buyers would be willing to accept higher prices or that all US mills would raise their prices uniformly.
With domestic mills' competitive pricing and quick deliveries, gathering flat rolled import orders right now is, as one trader put it, “like pulling teeth.” Offshore mills, particularly in Asia, are more optimistic about the market and are not interested in beating US mill offers in order to get US business. Traders say that foreign mills are content with the business they're getting for other markets and are therefore not offering competitive quotes to the US, especially as customers' expectation of speedy deliveries makes it almost impossible for imports to compete. In the coming weeks, HDG import offers are expected to continue trending sideways.
Indian 0.019” G90 offers currently range from $31.00 cwt. to $33.00 cwt. duty-paid, FOB loaded truck in US Gulf Coast ports, while South Korean offers for the same product range from $31.00 cwt. to $33.00 cwt. duty-paid, FOB loaded truck in US West Coast ports.
Chinese offers of 0.019” G90 range from $32.00 cwt. to $34.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt)duty-paid, FOB loaded truck in US Gulf ports, and while Taiwanese offers range from $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) duty-paid, FOB loaded truck in US West Coast ports.
As for 0.012” G30 imports, Indian offers continue to range from $33.00 cwt. to $35.00 cwt. in Gulf ports, while Chinese offers remain in the range of $34.00 cwt. to $36.00 cwt. in the Gulf, and Taiwanese offers are offered at the same range on the West Coast. Mexican and Korean offers found at $33.00 cwt. to $35.00 cwt. (Mexican offers are delivered at the border crossing while Korean offers are loaded truck in the West Coast).
Import offers of galvalume items (0.019" x 41.5625" Gr80/AZ55) from
Mexico range from $33.00 cwt. to $35.00 cwt. delivered at the border crossing and Taiwanese offers range from $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) duty-paid, FOB loaded truck on the West Coast. These prices compare to current the domestic price range for 0.019” AZ55 of $33.00 cwt. to $35.00 cwt. ex-works.