US domestic flats market baffled by fourth round of increases

Spot prices in the US domestic flats market are on the rise once again after a number of mills began informing customers Wednesday of yet another price adjustment.

Nucor's $1.50 cwt. ($33/mt or $30/nt) increase is effective immediately, and puts their benchmark asking prices at $35.50 cwt. ($783/mt or $710/nt) for hot rolled coil (HRC) and $40.50 cwt. ($893/mt or $810/nt) for cold rolled coil (CRC). Reports also indicate that ArcelorMittal N.A. and Steel Dynamics Inc. (SDI) have begun informing their customers this week of increasing prices as well.

Although spot prices have not had enough time yet to react to this week's additional $30/nt increase, prices in the spot market are up $2.00 cwt. ($44/mt or $40/nt) since our last report a week ago in accordance with the previous increases announced one-to-two weeks ago. Spot prices for HRC and CRC are now $32.00-$34.00 cwt. ($705-$750/mt or $640-$680/nt) and $37.00-$39.00 cwt. ($816-$860/mt or $740-$780/nt), respectively, ex-Midwest mill, although the lowest end of the ranges may only be available through the end of this week, as mills are pushing for higher prices on all new orders.

Surging prices may begin to slow however, if mills are met with enough resistance from buyers who don't see enough demand from end users to be in the position to pay higher prices. "Asking for $35.00 cwt. and above on HRC is a dangerous game" one Southeast distributor told SteelOrbis. "I don't know many people willing to pay those numbers-I'm certainly not."

For now, prices are expected to stay firm through the balance of Q1 2011, as an additional $40-50/lt increase in scrap is anticipated for January, giving mills more leverage to continue raising prices. Still, even though order activity remains relatively strong, it has slowed this past week, as expected increases led many buyers to lock in orders earlier this month.

The skyrocketing domestic spot prices have made import offers more attractive for US buyers who report looking at offerings from offshore mills more than they have in the past few months. Of these offshore offers, Russian HRC is drawing the lion's share of renewed interest from traders. South of the border, Mexico remains active in the market for HRC, although reports indicate that only limited tons of CRC may still be available. 

**Duty-paid FOB loaded truck in US Gulf ports