US domestic flat rolled increases gaining buyer support

As mills begin their third round of US domestic flat rolled price increases in about five weeks, buyers have shown less resistance to the higher prices. The blast furnace outage at AK Steel's Middletown, Ohio mill has created an increased sense of urgency in the market that had been missing over the last month. A couple of mills--including Severstal North America, ArcelorMittal USA and Steel Dynamics--have also announced a third round of price increases this past week, likely in order to help solidify the previous two price increases. Hot rolled coil (HRC) asking prices are now up to $32.50-$32.75 cwt. ($716-$722/mt or $650-$655/nt) ex-Midwest mill, with prices $5.00 cwt. ($110/mt or $100/nt) on cold rolled coil (CRC), and spot prices are slowly getting closer to those levels. Service centers have been steadily raising resale prices as well in the last couple weeks, which buyers say is a positive sign of customer support.

As mills have been heard increasingly reigning in sub-CRU deals in the last couple weeks, customers have been forced to pay higher prices on new orders. Lead times are well into August now for both HRC and CRC, and demand levels are steady enough to support the higher prices. Further, with domestic scrap prices likely to increase anywhere from $10-$30/lt--according to early speculation--in early July, flat rolled spots are poised to rise further in the near future. The long term trend, however, is still uncertain, so US buyers aren't exactly rushing to hedge buy with imports. Chinese CRC offers are still really only attractive on the US West Coast, but are also anticipated to increase soon. Mexican HRC offer prices are unchanged in the last week, although trader sources disclosed that sub-$30.00 cwt. ($661/mt or $600/nt) DDP loaded truck in US Gulf ports prices are still sporadically available for some customers.

*DDP loaded truck in US Gulf ports

**DDP loaded truck delivered into Houston