On Tuesday, Severstal North America issued a letter to its sales staff discussing US domestic and global market conditions and indicated that its new base prices on hot rolled coil (HRC) and cold rolled coil (CRC) are $42.00 cwt. ($926/mt or $840/nt) and $47.00 cwt. ($1,036/mt or $940/nt), respectively, ex-Midwest mill.
Although the letter made no clear indication one way or the other, the new base prices are clearly an increase from last week. Nevertheless, spot prices in the US domestic market are currently $38.00-$40.00 cwt. ($838-$882/mt or $760-$800/nt) for HRC and $44.00-$46.00 cwt. ($970-$1,014/mt or $880-$920/nt) for CRC, both ex-Midwest mill and down $1.00 cwt. ($22/mt or $20/nt) since last week. Severstal's announcement came as a surprise to many in the flats market, but in terms of new base prices, the letter has been virtually ignored, and spot prices continue to slip. "No one believes it will actually change anything, and if mills need to fill order books-and they will-they'll continue to cut deals," one Southern distributor told SteelOrbis.
Short lead times are greatly contributing to the downward pressure on domestic spot prices. Most domestic mills are in early-to-mid-June in their order books, but lead times for HRC at some mills are as little as two weeks. And so, the trend for flat-rolled prices is still pointing downward, and spot prices are likely to fall another $1.00 cwt. by month's end, with additional declines expected in June.
Consequently, interest in imports is easing, as US domestic prices will need to settle before buyers are confident enough to book offshore material. Regardless, Mexican offers of HRC have fallen $1.00 cwt. in the last week to $36.00-$38.00 cwt. ($7940$838/mt or $720-$760/nt) FOB loaded truck delivered into Houston ports; Mexican offers of CRC are unchanged however, and are still $43.00-$44.00 cwt. ($948-$970/mt or $860-$880/nt) FOB loaded truck delivered into Houston ports. Other import offers have remained unchanged as well, with Russian HRC offers to the US still $37.00-$38.00 cwt. ($816-$838/mt or $740-$760/nt) duty-paid FOB loaded truck in US Gulf ports and Chinese CRC offers continue to be found in the range of $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) duty-paid FOB loaded truck in US Gulf ports.