Following some hefty March price hikes from US domestic flat rolled mills, buyers are now telling SteelOrbis that there are more expected increases for April.
AK Steel has announced a $30 /nt ($33 /mt or $1.50 cwt.) increase for April orders and ArcelorMittal is expected to follow suit. Nucor has not opened orders for April just yet, but they are expected to be ranging $40 /nt to $50 /nt ($44 /mt to $55 /mt or $2.00 cwt. to $2.50 cwt.) higher than orders for March.
To recap the increases for March, domestic flat rolled mills drastically upped prices; namely Nucor who announced an $80 /nt ($88 /mt or $4.00 cwt.) increase, AK Steel who pushed prices up $80 /nt for February and another $30 /nt ($33 /mt or $1.50 cwt.) for March, and ArcelorMittal who increased its prices by $50 /nt ($55 /mt or $2.50 cwt.). Now the domestic steel mills are coming out with prices for April, which are up anywhere from $30 /nt to $50 /nt ($33 /mt to $55 /mt or $1.50 cwt. to $2.50 cwt.) from March orders.
There is no doubt that the new prices will stick. Factoring in the newly announced price increase from AK Steel for April orders, domestic hot rolled offers on the market are now ranging from $34.00 cwt. to $35.00 cwt. ($750 /mt to $772 /mt or $680 /nt to $700 /nt) FOB mill though buyers say there is not much out there for $34.00 cwt. unless it was booked a little earlier or you are a very special customer. On the spot market, a more realistic hot rolled coil price is $35.00 cwt.
Domestic cold rolled offers are now ranging from $38.50 cwt. to $39.50 cwt. ($849 /mt to $871 /mt or $770 /nt to $790 /nt). FOB mill. Prices are based on the US Midwest region.
The April price increase will likely be accepted in the market. Although demand conditions have not changed, buyers are worried about running out of inventories. Also in fear that the prices may even climb further in the months to come, the market is seeing a lot of hedge buying from customers trying to stay ahead of the game and the possible future increases.
Mills justify their constantly rising numbers with the steel industry's favorite quote of the first quarter of 2008, "higher raw material costs;" however, this month scrap prices have softened slightly and the scrap market may continue to correct itself after such a huge upswing in prices in December and January. Plus, the iron ore contracts are being negotiated as we speak and another sizable increase is guaranteed for 2008.
In the future, we may see flat rolled prices begin to level out, but for now and up through April they are trending upwards.
As for imports, there are no new offers as China has not yet returned from the Chinese New Year holiday. Chinese cold rolled offers are expected to surface around the week beginning February 18th after the New Year celebrations. These new offers are expected to be higher than when they last offered, going up on the same levels as domestic offerings. Commercial hot rolled import offers are non-existent in the US market; however, there is tonnage arriving at the US ports, but these tons are for re-rollers supplying from their parent or sister companies abroad.
According to license data from the US Import Administration, worldwide hot rolled export tonnage to the US totaled 190,710 mt in January 2008, with the top three exporters being Canada at 110,886 mt, Australia at 35,356 mt, and South Korea at 30,356 mt.
Worldwide cold rolled exports to the US totaled 88,732 mt in January 2008, according to data from the US Import Administration. Canada was the largest player with 40,780 mt, followed by China with 17,575 mt, and Brazil with 12,240 mt.