US domestic flats market struggles to absorb late-January increases

US flat-rolled product price hikes appeared to be stalling this week when mills began to raise prices for the seventh time in approximately nine weeks.

Purchasing activity in the US domestic flat-rolled market had begun to slow earlier this week, with reported bookings just below last week's average hot rolled coil (HRC) spot ranges of $39.00-$40.00 cwt. ($860-$882/mt or $780-$800/nt ) ex-Midwest mill. By mid-week however, Severstal North America had followed AK Steel's January-20 announced $2.50 cwt. ($55/mt or $50/nt) flats increase, while Nucor Sheet Mill Group raised prices $2.00 cwt. ($44/mt or $40/nt).

The full late January-announced increase has yet to be realized, and it is unclear at the moment whether or not the flat-rolled market can sustain $42.00 cwt. ($926/mt or $840/nt) prices for hot rolled coil and $47.00 cwt. ($1,036/mt or $940/nt) prices for cold rolled coil (CRC). But for now, spot prices are still up $1.00 cwt. ($22/mt or $20/nt) from last week on the high end, at $39.00-$41.00 cwt. ($860-$904/mt or $780-$820/nt) ex-Midwest mill for HRC and $44.00-$46.00 cwt. ($970-$1,014/mt or $880-$920/nt) ex-Midwest mill for CRC. Most orders are still being booked at last week's ranges, although a few orders have been placed at the higher numbers as mills begin to open order books for April.

During AK Steel's quarterly conference call earlier this week, President and CEO James L. Wainscott confirmed that AK Steel has already opened order books for April, with just a few late March bookings still available. While other mills remain bullish regarding market conditions and the status of current order books, March is still very much available at both Midwest and West Coast mills (with the exception of California Steel Industries, which officially closed March order books earlier this month), indicating that the latest price push was an attempt to force another round of hedge buying to quickly close up March order books.

Offshore, while Russian HRC offers of $39.00-$40.00 cwt. ($860-$882/mt or $780-$800/nt) duty-paid FOB loaded truck in US Gulf ports continue to garner attention from US buyers, significant tonnage has not been booked, as many in the US are reporting healthy inventories, and growing concern that spot prices in the US will begin to decline before import orders placed today will arrive.

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