US domestic flat rolled spot prices begin to erode

Domestic flat rolled spot prices have drifted slightly lower in the last week, following weeks of speculation that the market had reached a peak. Following a strike/production outage that began in April, US Steel and its union workers at the Lake Erie Works mill have agreed to a lockout-ending deal. While it will take at least a few weeks, if not longer, for the added production to be felt, sources tell SteelOrbis that the psychological effect of the strike's end is already having a negative impact on pricing. Since last week, hot rolled coil (HRC) and cold rolled coil (CRC) spot prices have slipped by $0.50 cwt. ($11/mt or $10/nt), and have the potential to slip further.

HRC spots are now $32.00-$33.00 cwt. ($705-$728/mt or $640-$660/nt) ex-Midwest mill and CRC spots are $36.50-$37.50 cwt. ($805-$827/mt or $730-$750/nt) ex-Midwest mill, but any further erosion is not anticipated to be  rapid or substantial.  Scrap prices will likely settle about $10/lt lower in September, adding to the "these prices can't last" mentality that is also taking a toll on spot prices. Inventories are lean, but not so much so that buyers feel any inclination to rush out and make large purchases. Rather, with spot prices now softening, buying activity is likely to slow down. Import activity for HRC and CRC is also quiet. Chinese CRC is attracting continued interest on the US West Coast, but Midwest customers are largely looking offshore for niche products rather than commodity grade material.

*DDP loaded truck in US Gulf ports
**DDP loaded truck delivered into Houston