Spotty activity evident in US flats market

Although most US domestic flats buyers are still delaying purchases amid fears of overproduction, some scattered activity has emerged in the last week.

Domestic overcapacity--including Severstal Columbus adding a second caster, ThyssenKrupp USA ramping up production in Calvert, Alabama and the newly restarted RG Steel mills--continues to have a negative impact on sentiment in the US domestic flats market. Coupled with the belief that the US market has not yet hit bottom, the majority of buyers are still making few, if any, purchases. However, in the last week, as domestic hot rolled coil (HRC) and cold rolled (CRC) spot prices slipped back yet again--both by about $1.00 cwt. ($22/mt or $20/nt)--some industry players have picked up their activity levels for fear of waiting too long and eventually missing the bottom of the market, which has already fallen as much as $13.00 cwt. ($287/mt or $260/nt) since April.

Furthermore, sources tell SteelOrbis that a number of mills are so desperate for HRC orders that deals have been cut for as much as $1.50 cwt. ($33/mt or $30/nt) under the current domestic spot range of $32.00-$34.00 cwt. ($705-$750/mt or $640-$680/nt) ex-Midwest mill for buyers willing to book immediately. And after falling $1.00 cwt., most domestic HRC spot prices are likely to move down yet again over the next one to two weeks. As for domestic CRC spot prices, the $1.00 cwt. decrease on the low end since last week now puts the current range at $38.00-$40.00 cwt. ($838-$882/mt or $760-$800/nt) ex-Midwest mill, but the upper range is eroding, as well. CRC spot prices continue to fall at a slower pace than their HRC counterparts due to a less dramatic supply/demand market imbalance, resulting in mills being less aggressive on orders for CRC.

While US flat-rolled spot prices continue moving lower, import offers are staying neutral. Even Mexico, which normally mirrors US price movements, has kept its prices for the US unchanged for the second consecutive week, putting Mexican HRC and CRC prices about $2.00 cwt. ($44/mt or $20/nt) higher than US spot prices now.

As for Korean HRC and Chinese CRC offer prices for delivery to the US West Coast, prices have stayed largely unchanged since mid-June. With Korean HRC and Chinese CRC prices only approximately $2.00-$3.00 cwt. ($44-$66/mt or $40-$60/nt) under current US domestic West Coast spot prices, few buyers are finding the offers attractive.
 

**DDP loaded truck in US West Coast ports