Scrap price surge lends support for rising US flats prices

With busheling scrap prices increasing as much as $50/lt in some areas of the US Midwest in December, a second round of mill-announced flat rolled price increases for $2.00-$2.50 cwt. ($44-$55/mt or $40-$50/nt) last week is gaining traction. According to industry sources, demand levels so far in December are also better than many had anticipated and US domestic hot rolled coil (HRC) spot prices have increased $1.00 cwt. ($22/mt or $20/nt) in the last week, while cold rolled coil (CRC) spot prices jumped $2.00 cwt. As with last week, flats mills in the South/Southeast are having the most trouble bumping up prices, as too much capacity and still short (approximately three weeks) lead times are hindering their price push.

Nevertheless, domestic spot prices overall are anticipated to continue to rise in the New Year, likely supported by another uptrend in scrap prices in January. As a result, US buyers have once again started turning to imports to hedge against the US domestic price run-up. Offshore mills, and even mills in Mexico, have been uncompetitive in the US market for months, especially when it comes to HRC; but trader sources tell SteelOrbis that in the last couple weeks, quite a few Russian orders have been booked, with prices currently between $31.00-$33.00 cwt. ($683-$728/mt or $620-$660/nt) DDP loaded truck in US Gulf ports.