US domestic flat rolled prices hold surprisingly strong

The US domestic flats market is defying expectations of a slower summer, and spot prices remain stable to up. August has been a steady month so far for service centers, as well as mills, following what ended up being a strong July. The fourth round of price increases, announced about a month ago, did not fully stick, particularly on larger orders, but it has bumped prices up over the past few weeks and helped to keep the market firm. Hot rolled coil (HRC) spot prices are up to $32.50-$33.50 cwt. ($716-$739/mt or $650-$670/nt) ex-Midwest mill, and mills haven't shown signs of the kind of nervous deal making that often indicates the market peaking or a downtrend on the horizon.

However, while HRC remains strong, this is not the case across the entirety of the flats market. The traditional $5.00 cwt. ($110/mt or $100/nt) spread between HRC and cold rolled coil (CRC) is compressed, and could come under further pressure in early fall. Import arrivals for CRC in September and October are expected to be higher than in previous months, boosting US buyer inventories with foreign material, and likely slowing their domestic order activity if demand doesn't improve. Current bookings for futures are quiet on the HRC front, but stable for CRC, despite an increase in Chinese and Indian prices in the last week. However, traders anticipate that deals will be made below new official prices.

*DDP loaded truck in US Gulf ports

**DDP loaded truck delivered into Houston