Effectiveness of US flats increases remains unclear

Although a number of mills have announced $2.00 cwt. ($44/mt or $40/nt) increase this past week, what impact they'll make on US domestic spot prices is still uncertain, although many are hopeful spot prices could at least temporarily stabilize. On July 2, Severstal North America sent a letter to customers indicating that new base prices on hot rolled coil (HRC) would be $31.75 cwt. ($700/mt or $635/nt) and $36.75 cwt. ($810/mt or $735/nt) for cold rolled coil (CRC). The announcement was swiftly followed by $2.00 cwt. ($44/mt or $40/nt) increases from NLMK USA, ArcelorMittal USA, US Steel, California Steel Industries, AK Steel and Nucor. Despite a somewhat united front from mills, the lack of activity this week due to the July 4th holiday has minimized any potential impact of the increase just yet. While some have locked in orders in case the increases do stick, other buyers haven't rushed to place orders just yet.

One main reason for the skepticism over the increase announcements is the $30-$60/lt drop in domestic scrap prices this month. Although it will likely take another week or so to determine the next direction of flat rolled spot prices, sources tell SteelOrbis they are more confident in the market's upside potential than downside, making them more inclined to consider imports. Mexico has been steadily taking HRC orders from the US at $30.00-$31.00 cwt. ($661-$683/mt or $600-$620/nt) DDP loaded truck delivered into Houston. Mexican CRC offers are down $0.50 cwt. ($11/mt or $10/nt) over the past week to $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) DDP loaded truck delivered into Houston, and are also attracting a slight influx of orders.

**DDP loaded truck in US Gulf ports