Price increases gaining little traction in US domestic flats market

Although most domestic flats mills have announced a second round of price increases in the last week, flat-rolled spot prices have stayed largely unchanged.

In the last week, most US domestic flats mills have issued additional price increases of $2.00 cwt. ($44/mt or $40/nt) on all new orders--which are in addition to $3.00 cwt. ($66/mt or $60/nt) price increases announced on August 10 and 11. But while the NLMK USA mills--who led the second flurry of increases last Friday--Nucor, USS POSCO (UPI) and California Steel Industries (CSI) said they would be raising prices $2.00 cwt. on all flats products, including hot rolled coil (HRC), cold rolled coil (CRC) and hot dipped galvanized (HDG) coil, AK Steel and RG Steel have indicated a $2.00 cwt. increase for HRC and CRC, but a $2.50 cwt. ($55/mt or $50/nt) increased on coated flat steel products. Other mills, including ArcelorMittal USA and US Steel, have chosen to simply indicate new base prices rather than issue an official increase--mill asking prices are now about $36.00-$37.00 cwt. ($794-$816/mt or $720-$740/nt) for HRC and $42.00 cwt. ($926/mt or $840/nt) for CRC, essentially a $2.00 cwt. increase as well.

Despite the different forms of mill price increases in the last few days, when coupled with mill increases of $3.00 cwt. about three weeks ago, official asking prices have jumped about $5.00 cwt. ($110/mt or $100/nt) since early August, while domestic spot prices have barely moved, and domestic buyers' cautious buying habits haven't changed. One Southeast distributor commented that the second increase is "just a scare tactic, and no one's falling for it."

A perceived strength in the initial $3.00 cwt. increase was that it represented a uniform stance by mills to put an end declining domestic spot prices; however, in the weeks since the announcement, mills have not been as united in enforcing the higher prices. Meanwhile, buyers are still reluctant to place large orders and remain skeptical of the effectiveness of such substantial increases in the last three weeks as the problem of domestic oversupply and overproduction persists. Additionally, industry insiders continue to inform SteelOrbis of deals being made below the current HRC spot price range of $32.00-$34.00 cwt. ($705-$750/mt or $640-$680/nt) ex-Midwest mill--unchanged since last week-- although most orders are being placed on the upper end of the range. CRC spot prices are $38.00-$39.00 cwt. ($838-$860/mt or $760-$780/nt) ex-Midwest mill, reflecting a $1.00 cwt. ($22/mt or $20/nt) increase on the low end in the last week, as the problem of oversupply is less far less pronounced for CRC than for HRC.

Not surprisingly, import activity is still quiet and traders tell SteelOrbis that with the exception of a few standard orders being placed south of the border in Mexico, and with Chinese CRC mills on the US West Coast, imports are of little interest to US buyers. However, if US domestic price increases do begin to gain some traction in the next couple weeks, import offer prices may once again become competitive and viable options for US buyers--that is, of course, if offshore mills don't begin issuing major price increases of their own in the meantime.

**DDP loaded truck in US Gulf ports