US CRC prices shift downward for three key reasons

Thursday, 15 November 2018 01:49:51 (GMT+3)   |   San Diego
       

The attempt to push prices upward in the US domestic flat steel market has not succeeded, sources tell SteelOrbis. At the time the early-October price increase was announced, prices were trending at $45.50-$47.50 cwt. ($1,003-$1,047/mt or $910-$950/nt), ex-mill, but softened by $1.00 cwt. ($22/mt or $20/nt) on the bottom end in the first few days after the increase was announced.

And while prices eventually switched course, firming up to $46-$47 cwt. ($1,014-$1,036/mt or $920-$940/nt), ex-mill, as reported by SteelOrbis last week, the spot market has once again reversed course.

Today, prices have revised downward by $1.00 cwt. ($22/mt or $20/nt), which puts the mid-November average US CRC spot market price in a range of $45-$46 cwt. ($992-$1,014/mt or $900-$920/nt), ex-mill, although buyers who are looking to book significant tonnage “can probably do $1.00 cwt. ($22/mt or $20/nt) better,” sources say.

The reason for the softness is threefold; first, US capacity utilization is up substantially year-over-year. The most recent data from the American Iron and Steel Institute show that for the week ending Nov. 10, capacity utilization was recorded at 81.7 percent, which is a stark uptick from the same reporting period last year, when capacity utilization was 73.3 percent.

Second, Section 232 tariffs have done little to curb imports; the most recent data from the US Department of Commerce show that for the month of September, the US imported 225,128 mt (census data) of cold rolled coil from global sources; in September 2017, the US imported 155,890 mt.

Lastly, data from the US Department of Commerce also show that US CRC exports have declined substantially in the past year, from 52,458 mt in September 2017, to 36,486 mt in September 2018.

As such, prior predictions continue that US flat rolled steel spot market prices are likely to continue to drift downward until Q2 2019.


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