Downticks in pricing for US domestic hot rolled coil (HRC) and cold rolled coil (CRC) have once again resumed since our last report a week ago, as short lead times and over-production continue to be the Achilles heel of the marketplace.
With yet another week of the mill-to-mill staring contest in which each is challenging the other to blink first, flats products continue to roll, a fact which bewilders both buyers and sellers alike, all of whom agree that the 38 percent year-on-year increase in US domestic steel production is out of skew with market demand.
"Everyone is beating each other to a pulp for orders, and no one is saying no to anything which isn't helping prices," commented a buyer in the Southwest, further indicating a belief that the ongoing cage fight between domestic mills will continue until US Steel and/or Nucor indicate they're taking capacity down a notch. "Until one of them makes an announcement no one else is going to jump on that train."
For now, the forecast for HRC and CRC remains downward, with a continued pattern of softening expected until the suppliers finally move to constrict their output.
In terms of overseas imports, Chinese pricing, although neutral from last week, is anticipated to increase in the near future which would have this product falling in step with a similar pattern being seen for Chinese coated products. Previously seen CRC offers out of India have muted, and Russia, although having recently been heard offering HRC at $28.00 cwt. to $30 cwt. ($617/mt to $661/mt or $560/nt to $600/nt), is also being a bit more quiet, with no confirmed offerings having been reported this week. But all of this may be a moot point- as traders are strongly indicating that there is not much of an interest in playing with futures until the domestic market becomes less erratic.
Looking south, Mexican HRC and CRC has remained relatively neutral, although the previously seen $2.00 cwt. ($44/mt or $40/nt) transaction range for HRC has since narrowed to $1.00 cwt. ($22/mt or $20/nt). Mexican suppliers have been a little more active exporting to Latin American destinations recently though, at approximately $600/mt to $620/mt, FOB Mexico mill.
Cwt. Metric Ton (mt) Net ton (nt) Change from last week US domestic HRC $27 - $28 $595 - $617 $540 - $560 ↓ $1.00 cwt. CRC $32 - $33 $705 - $728 $640 - $660 ↓ $1.00 cwt. Mexican HRC $28 - $29 $617 - $639 $560 - $580 ↓ $1.00 cwt. on high end CRC $33 - $35 $728 - $772 $660 - $700 neutral Chinese CRC $35-$37 $772 - $816 $700-$740 neutral
*Mexican offers are FOB loaded truck delivered to customer yards in US border states.
** Chinese offerings are FOB loaded truck, US Gulf ports.