With US flat rolled spot prices expected to rise by up to $40/nt ($44/mt or $2.00 cwt.) for October shipments, everyone is waiting for spot market leader
Nucor to make the first move.
Granted, two key US flat rolled producers,
US Steel and AK Steel, have already announced price increases for October; however, these mills have very little participation in the spot market and mostly supply to contract/
automotive customers. Spot market players like
Nucor are expected to increase flat rolled base prices by up to $40/nt (though as low as $20/nt if
Nucor opts not to overshoot the minor increase in US busheling
scrap prices) October increase, while raising prices for in-demand
coated products by an even greater degree.
US busheling
scrap prices only posted a slight increase this month, but the sustained up-trend in the US flat rolled market is only partly due to increased raw material costs. After the de-stocking period finally ended this spring, buyers have been replenishing their stocks, and even doing some hedge buying in anticipation of further price hikes. Demand has also picked up in the third quarter, particularly for
coated products like HDG and Galvalume, while imports are still absent from the market. All of these factors have the US flat rolled market poised to continue improvement through at least the next month, and likely through the end of the year.
US mills are mostly sold out on HDG for September, and the $31.00 cwt. ($683 /mt or $620 /nt) September HDG/Galvalume base price is expected to rise by about $2.00 cwt. to reach approximately $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) for October shipments. However, with coatings extras set to rise as well under the influence of higher zinc prices, October HDG offers for G90 and G30 coatings are expected to rise by at least $3.00 cwt. ($60 /nt or $66 /mt), with light gauge items seeing the greatest increase. Domestic offers for 0.019” x 48” G90 (0.48 mm x 1.219 m) and 0.019" x 41.5625" AZ55 (0.482 mm x 1.056 m) offers are expected to rise from $40.00 cwt. ($882 /mt or $800 /nt) in September to $43.00 cwt. ($948 /mt or $860 /nt) in October, while 0.012” x 40.875” G30 (0.30 mm x 1.04 m) should rise to $45.00 cwt. ($992 /mt or $900 /nt). All prices are ex-mill, Midwest.
Meanwhile, the import market remains near-silent, with traders reporting that there are no offers for any of the mainstream flat rolled products at present. The main offshore HDG suppliers – namely,
India and East Asia – have withdrawn their offers and when they return to the market, they are expected to come back with offers $50 to $100/ton higher than their previous offers. With the gap between domestic and import HDG prices continuing to widen, imports will remain only a tiny part of the US market for the foreseeable future, thereby contributing to the strength of the domestic market.
US HDG import volumes have dwindled considerably in recent months despite the up-tick in US demand and pricing. July US import license data show 57,735 mt of HDG sheet and strip imports, which compares to 50,586 mt in June, and is about 60 percent less than the volume of HDG imported by the US in July 2008 (147,047 mt). The US' top HDG import sources in July 2009 were:
Canada, with 21,346 mt;
Taiwan, at 9,974 mt;
Korea, at 6,952 mt;
Mexico, at 6,600 mt, and
India, with 4,726 mt.