US domestic flats buyers cross fingers, hope increases will sustain

"Activity is still not good," commented one trader.  "While some mills may have started reducing turns, they haven't cut back a whole heck of a lot, and the current level of demand is not enough to exhaust current production levels."   Short lead times are also a challenge, as SteelOrbis has learned that at least one buyer of HRC was recently informed their large order would be complete in just 18 days.

The general consensus, however, is that price increase announcements needed to happen in order to quash the downward pricing momentum, and it's strongly believed that additional increase letters will be released for October, which could very well induce an additional flurry of fear-based order placement.   The question, though, is if this fear-factor of continued upswings will be enough to continue the current stabilization within the flats sector.

But for now at least, the forecast for HRC and CRC will sustain at a slightly upward trend, as the average transaction range for HRC and CRC has widened by $1.00 cwt. ($22/mt or $20/nt) on the top end since our last report a week ago.  At the same time, it should be noted that a number of service  centers continue to report an ability to place orders below the high end of the following price span. 

Looking south of the border, Mexican HRC and CRC offers have trended neutral since our last report, keeping Mexican product on relative par with US offerings.  Chinese CRC, however, has ticked up, making imports from that country less attractive than they were a week ago  But again, considering the fact that the dust is still settling due to recent price momentum shifts within the domestic market, few (if any) traders are taking the overseas gamble.

*Mexican offers are FOB loaded truck US border states.

**Chinese offerings are duty-paid FOB loaded truck, US Gulf ports.