Mill announcements ease price decline in US flats market

Late May price increases from US domestic mills have boosted activity and curbed rapid price declines, but spot prices may have not yet hit bottom.

Most US flat-rolled mills raised base prices about $2.00 cwt. ($44/mt or $40/nt) over the last two weeks, putting official asking prices at approximately $39.00 cwt. ($860/mt or $780/nt) ex-mill on hot rolled coil (HRC) and $44.00 cwt. ($970/mt or $880/nt) ex-mill on cold rolled coil (CRC). But mills aren't getting their official asking prices with new orders, and US domestic HRC spot prices are still $37.00-$38.00 cwt. ($816-$838/mt or $740/nt) ex-Midwest mill, with a number of offers heard below the range. The CRC spot price range has narrowed to about $43.00-$44.00 cwt. ($948-$970/mt or $860-$880/nt) ex-Midwest mill-down $1.00 cwt. ($22/mt or $20/nt) on the high end since last week. And sources tell SteelOrbis that flats spot prices may not have hit bottom just yet-shorter lead times are one of the biggest obstacles to mills firming up spot prices.

So far, mills have not insisted on higher prices, and it is unlikely that they will enforce the new prices rather than fill order books with slightly less expensive orders. After barely filling May order books, June is shaping up to be a slow month as well. While most mills are, for the most part, in July on CRC, HRC order books are still in June with lead times only at about two to three weeks.

What may help to prop spot prices back up will be US automotive production getting back on track, lessening spot availability at integrated mills. The slowdown in automotive demand created an abundance of spot availability at many flats mills in April and May, adding to downward pressure on domestic spot prices. The US branch of Toyota Corporation announced in mid-May that production at its plants-which was cut to as little as 30 percent for some models after the March disaster in Japan-would be back up to 70 percent in June; production of certain models would even reach 100 percent.

If US spot prices do begin to stabilize, it could help reignite interest in imports, which has been lagging since April. Russian and Chinese mills are no longer pushing their respective HRC and CRC offers to the US, which are now in the range of, or even slightly above, US domestic spot prices. As for Mexico, mills south of the border have been heard offering deals below official offer prices to pad their order books, in the range of $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) for HRC and $43.00-$44.00 cwt. ($948-$970/mt or $860-$880/nt) for CRC, both DDP loaded truck delivered into Houston.

*DDP loaded truck delivered into Houston

**DDP loaded truck in US Gulf ports