Second increase anticipated as US flats prices begin to rise

Following an announced price increase and a burst or restocking activity, US domestic flat rolled prices are now trending higher. After US Steel told customers on October 16 it was raising flat rolled prices $2.00 cwt. ($44/mt or $40/nt), other mills quickly followed suit, and a mild flurry of purchasing activity ensued. Sources tell SteelOrbis that most mills still allowed customers to place orders at pre-increase levels immediately after the increase, and many buyers did, after delaying purchasing activity for weeks. The hedge buys allowed mills to stretch out lead times slightly to about three weeks on hot rolled coil (HRC) and four to six weeks on cold rolled coil (CRC), giving the price move some momentum. As a result, some of the lowest HRC deals of sub-$28.00 cwt. ($617/mt or $560/nt) ex-Midwest mill are now gone, and mills are quoting higher prices.

While larger buyers are still able to place an order without paying an increase, smaller buyers are already paying at least a part of the increase, bringing both HRC and CRC spot prices up $1.00 cwt. ($22/mt or $20/nt) on the high end since last week. In order to keep the sudden momentum going, mills are expected to announce a second price increase sooner rather than later--an increase that will be at least partially supported by an anticipated scrap increase in November. However, sources have indicated that a couple mills have already told customers plans to increase output on account of rising prices, which some worry could overload supply levels once again and impede and price increase progress mills are making. With price uncertainty still a major factor in the domestic market, most buyers are shying away from the import market, although Chinese mills are still able to collect some orders from West Coast buyers.

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