Price increases trigger spike in US domestic flats buying

Severstal North America's leading move to raise flat rolled prices on November 2 (effective with shipments 11/28 and later) came as little surprise in the US domestic flats market, where rumblings of an increase had been growing in the days leading up to the increase. Severstal's announcement indicated official minimum base prices of $33.50 cwt. ($739/mt or $670/nt) for hot rolled coil (HRC), and $39.00 cwt. ($860/mt or $780/nt) on cold rolled coil (CRC) and hot dipped galvanized (HDG) base, essentially raising prices $1.50 cwt. ($33/mt or $30/nt). NLMK USA was the next to issue a price increase, but stated that effective immediately, all prices would be increased $2.50 cwt. ($55/mt or $50/nt). According to industry insiders, other mills had been advising customers to place orders quickly as their prices would soon be going up as well.

The increases have had no effect on prices yet--sources tell SteelOrbis that no mill has actually begun enforcing the higher prices--and domestic HRC spot prices are still $29.00-$31.00 cwt. ($639-$683/mt or $580-$620/nt) ex-Midwest mill and CRC spot prices have actually fallen $1.00 cwt. ($22/mt or $20/nt) since last week to $34.00-$36.00 cwt. ($750-$794/mt or $680-$720/nt) ex-Midwest mill. However, some of the exceptionally low deals have been withdrawn, and only particularly large orders are garnering prices at the low end of the ranges. The increases also prompted a frenzy of buying activity from buyers that had been abstaining from making any purchases for weeks. It remains to be seen how much of an impact the price announcements will have in the long-term, but at least for a couple weeks, the spot price erosion is likely to cease.

Conversely, import activity remains extremely slow, as volatile US domestic flats prices aren't allowing much room for gambling on an offshore purchase. Even Mexican HRC prices are too high for most, at $2.75 ($61/mt or $55/nt) above US domestic spots.

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