Although demand is by no means making a resurgent comeback, it looks like the US flat rolled market has picked up enough momentum to maintain its current strength through at least October, with
coated products leading the way.
Even with lousy economic conditions and a weak
automotive market, the US flat rolled market continues to trend upwards, as the inventory de-stocking process has completed, and there are few new supplies entering the market. Furthermore, raw material prices are trending up, with US busheling
scrap rising by $90/nt ($99/mt or $4.50 cwt.) this month, and
automotive production, lackluster as it still is, is starting to ramp back up as well.
On the demand side, things are improving slightly from the
automotive corner. GM and Chrysler are both bringing back some
production after idling output at many plants as they went through bankruptcy reorganization. To meet pent-up auto demand, US auto
production is expected to rise from 2.2 million vehicles built in the first six months of 2009, to 3.26 million units in the second half, according to estimates. While still depressed from the
production levels of previous years, the expected pick-up in
automotive, though slight, is providing a decent boost to the flat rolled market because inventories have been drawn down to such lean levels.
With most flat rolled mills indicating in the last couple weeks that in addition to the July and August price hikes, they will raise their prices at least another $40/nt to $60/nt ($44 /mt to $66 /mt or $2.00 cwt. to $3.00 cwt.) for September, domestic spot prices for most products have inched up by about another $2.00 cwt. since last week. In general,
coated products remain the hottest of the flat rolled bunch, with Galvalume being especially tight.
Most domestic
galvanized coil base prices now range from $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $540 /nt to $620 /nt), while 0.019” x 48” G90 (0.48 mm x 1.219 m) offers now range from $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt). Domestic offers of 0.012” x 40.875” G30 (0.30 mm x 1.04 m) now range from $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt). Mills are mostly taking orders for September shipments but there is still some availability for August at some mills, depending on product. All prices are ex-mill, Midwest.
Domestic Galvalume prices have also trended upward by about $2.00 cwt since last week with base prices now ranging from $30.00 cwt. to $32.00 cwt. ($661 /mt to $705 /mt or $600 /nt to $640 /nt) and 0.019" x 41.5625" AZ55 (0.482 mm x 1.056 m) offers now ranging from $39.00 cwt. to $41.00 cwt. ($860 /mt to $904 /mt or $780 /nt to $820 /nt) ex-Midwest mills.
With spot prices continuing to rise on a weekly basis, customers seem to be slowly warming to the new price levels, and while mills are not booked out for September yet, they are expected to fill up within the next couple weeks. And if all goes as planned, another increase will be on the way in October.
On the supply end, US flat rolled mills, though inching up
production modestly in recent weeks, are still producing at drastically reduced capacities and are not expected to increase
production in a major way in the near future as they want to maintain their price momentum. Meanwhile, imports are still silent as can be, and customers, still uncertain about the overall economic environment, continue to keep inventories at a bare minimum. With all of these factors combined with the rising raw material costs and slight up-trend in demand, the US flat rolled market is poised to stay tight through at least October. November/December may be a different story, due to the slow holiday season, and any major drop in
scrap prices could also cause the market to backslide somewhat. But for at least the next couple months, it looks like the US flat rolled market, particularly that for
coated products, will remain firm for at least the next month.
Most import HDG offers have remained unchanged since last week, though there is still next to no interest in buying offshore right now. The latest import offers of 0.019” G90 from
India range from $38.00 cwt. to $40.00 cwt. duty-paid, FOB loaded truck in US Gulf ports, while the latest offers of this product from
China are about $2.00 cwt. lower.
Offers of 0.012” G30 from both
India and
China range from approximately $40.00 cwt. to $42.00 cwt. in the Gulf.
India is offering Galvalume (0.019” AZ55) at a range of $41.00 cwt. to $43.00 cwt. ($904 /mt to $948 /mt or $820 /nt to $860 /nt) in the Gulf.