While early last week it seemed as if spot pricing for hot rolled coil (HRC) and cold rolled coil (CRC) had finally begun to stabilize, as the close of the work week approached, transaction pricing for both products began to soften.
Current domestic spot pricing for HRC has softened approximately $2.00 cwt. ($44/mt or $40/nt) since our last report a week ago is now being reported in the approximate range of $32.00 cwt. to $34.00 cwt. ($705/mt to $750/mt or $640/nt to $680/nt) ex-Midwest mills. Transaction pricing for CRC has also softened, by $1.00 cwt. ($22/mt or $20/nt) and is now being reported in the approximate range of $38.00 cwt. to $40.00 cwt. ($838/mt to $882/mt or $760/nt to $800/nt) ex-Midwest mills.
While some service centers have been anticipating a dip in order activity during the summer months, it seems as if the expectation may have begun to materialize sooner than they once believed, as larger service centers in both the Southeast and Texas have reported slower than usual activity. While one seller joked about sitting his feet up trying to hammer out cold calls to try to move product, other service centers throughout the country resonated his tone of order flattening. "Our orders have flattened out a bit since last week," commented one service center manager. "I think everyone has already done their ordering for the month and now people are just watching and waiting to see what happens with pricing." Price momentum, it seems, has everyone concerned, and while some are optimistic that the softening in HRC and CRC transaction prices are "very likely just a temporary blip", others fear a repeat of the pricing crash of 2008.
To that same effect, the renewed embracement of price flexibility by AK Steel is also a matter of concern. "It's always been their philosophy," added an East Coast trader. "When they think the market is ready to turn, they tend to be the first one to cut prices to get the orders." For now, however, this "battle of the nerves", as it's been put, may have mills in competition with one another to see who can hold their pricing ground the longest before giving way to reductions.
Looking overseas, Russia has once again started offering HRC into the US, at $34.00 cwt. to $35.00 cwt. ($750/mt to $773/mt or $680/nt to $700/nt), FOB loaded truck US Gulf ports. China is still offering CRC into the US, $39.00 cwt. ($860/mt or $780/nt) and above, FOB loaded truck US Gulf ports, although with the continued pricing volatility within the US domestic market, offshore offers are not currently being entertained.