US flat rolled mills have increased their prices every month so far this year, but now there are talks that demand may be faltering, and there is more hot rolled coil (HRC) availability. Has the market finally reached its peak?
The flat rolled market has seen a wave of increases since the beginning of this year. Domestic mills have continually upped their prices to keep up with rising raw material costs and strong demand. But now it seems the market may be leveling off -- either that or perhaps a seasonal slowdown is occurring.
All of the major domestic mills made their July price announcements a couple of weeks ago, and to customers' surprise, the increase wasn't as hefty as some expected. Whereas a couple months ago, increases were in the three-digits, the most recent one was modest comparatively. Two major mills, ArcelorMittal and US Steel even extended their July pricing through the month of August as well, suggesting that things may finally be beginning to cool off.
Spot prices for domestic HRC are in the range of $53.00 cwt. to $56.25 cwt. ($1,168 /mt to $1,240 /mt or $1,060 /nt to $1,125 /nt) ex-mill Midwest, while CRC ranges from $58.00 cwt. to $61.25 cwt. ($1,279 /mt to $1,350/mt or $1,160 /nt to $1,225 /nt) ex-mill Midwest.
West Coast prices are traditionally $3.00 cwt. ($66 /mt or $60 /nt) higher than the domestic Midwest price. CSI recently announced a delayed $75 /nt ($3.75 cwt. or $83 /mt) increase for July, while USS Posco had already come out with its prices for August orders ($70 /nt increase for CRC); however, prices from USS Posco are, more or less, right in line with the higher end of the Midwest price range for July orders.
Market chatter has indicated that HRC demand is beginning to slip and that more tonnage is now available in the marketplace. There have been a couple explanations for this, but most agree, as galvanized coil demand was losing its momentum, mills shifted their production to HRC, as that product was much stronger. Now, ironically, there is more tonnage available and not as strong of a demand for it. This could just be the usual summer doldrums, but it could also be the flat rolled market finally hitting the peak of its latest price rally.
On the import side of the market, there are virtually no HRC offers to the US, although CRC offers from China have continued to surface. Chinese offers have increased by $3.00 cwt. ($66 /mt or $60 /nt) since our last report two weeks ago. Offerings now range from $59.00 cwt. to $61.00 cwt. ($1,301 /mt to $1,345 /mt or $1,180 /nt to $1,220 /nt) FOB loaded truck West Coast ports, which may find some interested parties in the US as they are reasonably priced, comparable to domestic numbers.
The above offers are for August production and October deliveries as Chinese steel products for July production will not be available for exports, as they are to remain in the domestic market to be used in the relief efforts for the devastating May 12, 2008 earthquake in China, according to government mandate.