Worldwide economic insecurity and tumbling busheling scrap prices continue to contribute to further price decreases in the US flat rolled market.
Nucor announced last week that its November 2008 raw materials surcharge (RMS) will decrease by $280/nt ($309/mt or $14.00 cwt.) from the October surcharge. This decrease puts HRC contract prices in the range of $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt). While the spot market price is not yet at these low numbers, it is likely that it will trend down to this level.
Meanwhile, hot rolled coil (HRC) and cold rolled coil (CRC) domestic spot prices fell about another $4.00 cwt. ($88 /mt or $80 /nt) since our report last week.
Most domestic HRC spot market prices now range from $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt) ex-mill in the Midwest; however, offers can be found in a wide range from as low as $32.00 cwt ($705 /mt or $640 /nt) to as high as $45.00 cwt. ($992 /mt or $900 /nt). One trader told SteelOrbis this week, "There is a lot of confusion as to where the market actually is."
The gap between HRC and CRC spot market prices is about $5.00 cwt. ($110 /mt to $100 /nt), as most CRC offers now range from $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt).
Busheling prices declined another $50 /long ton (lt) this week, bringing the monthly decrease to $330 /lt. Combine the falling busheling prices with economic instability and the mills' willingness to negotiate just about any business, and it is difficult in today's market to persuade even the buyers who are interested in these current low flat rolled rates -- since prices are likely to continue to decline for some time. Mills are cutting production to try to counteract the price slide, but with virtually no demand, there is only so much that mills can do to influence the market.
Mexico continues to be the US market's biggest competitor. Mexico is offering HRC to the US at the border crossing in the range of $35.00 cwt. to $40.00 cwt. ($772 /mt to $882 /mt or $700 /nt to $800 /nt), which is about a $4.00 cwt. ($88 /mt or $80 /nt) decrease from last week. Mexico's CRC pricing offers have not officially changed from last week, at $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt). However, Mexico is still aggressively negotiating orders and, in some cases, is willing to deliver the goods anywhere in the US, and even to Canada. They are also offering very short lead times.
Russia is also trying to become competitive, offering HRC in the range of $35.00 cwt. to $40.00 cwt. ($772 /mt to $882 /mt or $700 /nt to $800 /nt) duty-paid FOB loaded truck in US Gulf ports.
China lowered its CRC offers by about $3.00 cwt. ($66 /mt or $60 /nt) for the third consecutive week, to the range of $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt) duty-paid, FOB loaded truck in US Gulf or West Coast ports.
Brazil is also offering CRC in the range of $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt) duty-paid, FOB loaded truck in US Gulf ports, while new offers from India are not out yet.
Census Data from the US Steel Import Monitoring and Analysis System (SIMA) show that total tonnages of import HRC arriving in the US during August were 206,031 mt, which is 12,137 mt less than the 218,168 mt imported in July. The largest quantities of import HRC in August came from: Canada, at 55,903 mt; Australia, at 55,800 mt; South Korea, at 35,430 mt; and Netherlands, at 27,425 mt. Other smaller HRC sources during this period included Russia, France and Mexico.
Total tonnages of import CRC arriving in the US during August were 59,178 mt, which is 19,057 mt less than the 78,235 mt imported in July. The largest quantities of import CRC in August came from: Canada, at 22,997 mt; China, at 8,172 mt; Japan, at 8,044 mt; Netherlands, at 5,207 mt; Mexico, at 4,450 mt; and Sweden, at 3,805 mt.