With US busheling scrap prices rising further this month and customers' flat rolled inventories running on empty, US sheet mills are pushing for another spot price hike.
On Monday of this week, US flat rolled producer AK Steel announced a price hike of $60/nt ($66/mt $3.00 cwt.) for all carbon steel spot orders, effective immediately. This increase even exceeds the rise in January scrap costs (so far totaling about $45/long ton on the domestic busheling side). AK also announced new coatings extras for galvanized products. Other flat rolled steelmakers are expected to follow with their own base price and coating extras increases, though despite AK's announcement coming first, spot market leader Nucor will likely be the producer that sets the tone for this next round of February/March sheet price hikes. Early indications are that Nucor may opt for a more moderate increase to base prices that more closely reflects the rise in scrap costs.
Galvanized/coated products remain one of the stronger segments of the US flat rolled market, with lead times currently in the last week of February. Since last week, the offered price range for hot dipped galvanized (HDG) coil base prices expanded upward by about $0.50 cwt. ($11/mt or $10/nt), with most domestic spot offers now ranging from approximately $33.50 cwt. to $35.00 cwt. ($739/mt to $772/mt or $670/nt to $700/nt) ex-mill, Midwest. Expect more offers to gravitate towards the higher end of this range as the latest round of price hikes starts to sink in. The range of domestic offers for 0.019" x 48" G90 (0.48 mm x 1.219 m) is about the same as it was last week, at approximately $45.00 cwt. to $46.00 cwt. ($992/mt to $1,014/mt or $900/nt to $920/nt) ex-mill, Midwest, but this range is also trending upward, given the new base price and coatings extra hikes. Offers of 0.012" x 40.875" G30 (0.30 mm x 1.04 m), currently range from approximately $48.00 cwt. to $50.00 cwt. ($1,058/mt to $1,102/mt or $960/nt to $1,000/nt) ex-mill, Midwest, and are also trending up.
Domestic offers of Galvalume coils with the specifications of 0.019" x 41.5625" Gr80/AZ55, currently range from $45.00 cwt. to $46.00 cwt. ex-mill. Galvalume business is said to be decent, though not as strong as that for other coated products, as the metal building industry is weak, and zinc is a smaller part of the cost structure for Galvalume.
Coated product inventories are generally pretty low throughout the US market as most customers have deferred from replenishing their inventories for as long as possible. The low inventories along with the rising scrap and zinc costs are making for a bullish attitude on the part of the mills, and the market seems to be showing no signs of slowing down yet. Therefore, it is expected that many customers who had been sitting on the sidelines will soon have to return to the market once they realize that the good deals are starting to dry up. This inventory replenishment should allow the current upward price trend for HDG and other flat rolled products to continue into the near-term.
On the import side, offshore sources have been waiting for a clear announcement from US domestic mills before making new offers. Early indications are that the new Chinese offers of 0.019" G90 will be offered at at least $45.50 cwt. ($1,003/mt or $910/nt) duty-paid, FOB loaded truck in US Gulf ports. Indications for Indian offers of 0.012" G30 are expected to be above $45.00 cwt. while Taiwanese offers of 0.012" G30 are expected to be $47.00 cwt. ($1,036/mt or $940/nt) and above (both duty-paid, FOB loaded truck in US Gulf ports). The latest offshore offers of Galvalume start at $46.00 cwt. duty-paid, FOB loaded truck in US Gulf ports.
Generally, import HDG offers are not competitive when compared to domestic offers and are expected to rise further in step with domestic. However, some buyers' interest in imports may be piqued again as domestic offers and lead times continue to rise.