Although sources have recently predicted that US domestic flat steel prices were at or near their peak, some are now pointing to the expected scrap price uptrend next month to wonder if flats prices could see further upticks before coming down. Sources say US flats mills could start bringing prices down and still remain profitable, even with a scrap uptrend, but the question is whether there is any incentive to do so.
However, high steel prices might already be having a negative effect on demand. Sources say some steel buyers in the construction sector are holding off on booking orders for future projects until they absolutely need to buy, hoping prices drop before then, and some manufacturers are reportedly cutting back production because profit margins are too thin.
While most sources agree that US flat steel prices will come down, the main question is how rapid the decline will be—if the decline is predicted to be slow and gradual, buyers can turn to imports to fulfill their needs, but if buyers think domestic flats prices are headed for a crash, imports arriving several months in the future will not seem as attractive.
For now, while sources do not necessarily foresee a formal mill price increase on the horizon, US domestic flats prices could tick upward again before they finally crack. Already this week, US domestic HRC prices are up on the low end, now ranging from $58-$60 cwt. ($1,279-$1,323/mt or $1,160-$1,200/nt) FOB mill, compared to $54-$60 cwt. ($1,191-$1,323/mt or $1,080-$1,200/nt) FOB mill last week.
As for US domestic CRC, spot prices are also up on the low end of the range, now at $68-$70 cwt. ($1,499-$1,543/mt or $1,360-$1,400/nt) FOB mill, compared to $65-$70 cwt. ($1,433-$1,543/mt or $1,300-$1,400/nt) FOB mill last week.