Price slide eases in US domestic flats market

While US domestic flats prices have continued to decline in the last week, they are beginning to fall at a more measured pace.

The US domestic flat-rolled market remains uncertain as buyers, particularly service centers, continue to delay making purchases while running on lean inventory levels. Sources have indicated that flat-rolled inventories at some service centers may even be "unsustainably low" in some cases. The latest Metals Service Center Institute (MSCI) data indicated that flat-rolled service center inventories fell to a 2.0 months-on-hand supply in June compared to 2.2 months-on-hand in May. Meanwhile, daily shipments edged lower to 104,500 nt in June compared to 105,300 nt in May. However, lower inventories and overall meager flat-rolled consumption in the last couple months has many industry insiders predicting that a price floor, and eventually a rebound in spot prices, may be on the horizon as buyers move to restock inventories.

It is too early to predict when that price floor will be reached; however, the downtrend in domestic flats prices has begun to slow in the last week. But while the price slide is moderating, it certainly hasn't ceased. Little activity and short lead times--one-to-two weeks for hot rolled and two-to-four weeks for cold rolled--is keeping flat-rolled spot prices depressed. After a $1.00 cwt. ($22/mt or $20/nt) drop last week, the range for domestic hot rolled coil (HRC) spot prices has widened with a $1.00 cwt. decrease on the low end this week to $33.00-$35.00 cwt. ($728-$772/mt or $660-$700/nt) ex-Midwest mill. Conversely, the range for domestic cold rolled coil (CRC) spot prices has narrowed with a $1.00 cwt. decrease on the high end in the last week to $39.00-$40.00 cwt. ($860-$882/mt or $780-$800/nt) ex-Midwest mill.

As for imports, US buyers currently have little incentive to book anything offshore as most import prices are now higher than US domestic spot prices, having remained neutral in the last week. But while futures bookings are stagnant, orders placed offshore in late April and May continue to make their way to the US in high numbers. As of July 27, 279,393 mt (license data) of hot rolled sheet already arrived in July, according to Steel Import Monitoring and Analysis (SIMA) data; in June, 201,596 mt (preliminary census data) of hot rolled sheet was imported. Imports from Korea and Australia led the surge; Korean mills exported 81,867 mt (license data) to the US in July compared to 63,205 mt (preliminary census data) in June, and Australian mills exported 73,100 mt of hot rolled sheet to the US in July after exporting 20,515 mt in June.

**DDP loaded truck in US West Coast ports