Fourth round of price increases leaves US flats market uncertain

The buyer support that followed the three initial price increases for US domestic flat-rolled steel has not been evident in the latest price increase attempt, resulting in concerns the market may have peaked. On Tuesday, Severstal North America increased its flat rolled prices $1.00 cwt. ($22/mt or $20/nt) and was followed with $1.25 cwt. ($28/mt or $25/nt) increases from AK Steel and US Steel. Other mills have been rumored to be planning increases of their own, but this latest round has not improved purchasing activity or prices. Hot rolled coil (HRC) spots are still in the range of $31.50-$32.50 cwt. ($694-$716/mt or $630-$650/nt) ex-Midwest mill, but trending toward the higher end of the range.

SteelOrbis sources point to increased mill production in the last couple weeks, and steel service centers choosing to keep inventories lean despite rising prices, as drivers of the current market uncertainty. Further, concerns of a summer slowdown have buyers acting with increased caution, and some are concerned that the latest price increase announcements are more of an attempt to keep spot prices firm and lead times extended (lead times are in mid- to late September on cold rolled coil (CRC) and late August for HRC),  than to actually raise prices again. For now, purchasing activity is still steady and demand is stable, but pessimism has reemerged in the market. That uncertainty, coupled with unattractive prices, is keeping imports at bay. Chinese CRC continues to only attract interest on the US West Coast, while Russian mills have pulled their previous CRC offers, and are now only offering HRC to the US.

*DDP loaded truck in US Gulf ports

**DDP loaded truck delivered into Houston