US domestic flats prices drift lower

There is little purchasing activity to be seen in the US flats market, but the few spot orders being placed today are at lower prices than last week, regardless of higher raw material costs.

As with previous weeks, US buyer activity remains apathetic, and there is little consensus that US domestic flats prices have bottomed just yet. "No one thinks we're there yet," one Midwest distributor told SteelOrbis. "If everyone thought we were at the bottom they'd be buying." Buyers continue to make any necessary purchases in small quantities under the expectation that flats prices still have room to fall.

And for at least the next one to weeks, the domestic trend will likely still point downward.  Even US domestic scrap prices firming in July (busheling prices are up about $10-$15/lt on the US East Coast and rose $10/lt in the Midwest) has done little to end the price slide that began in mid-April, and isn't likely to have much impact going forward. In the last week, US domestic hot rolled coil (HRC) and cold rolled coil (CRC) spot prices have dropped $1.00 cwt. ($22/mt or $20/nt) into the range of $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) and $41.00-$42.00 cwt. ($904-$926/mt or $820-$840/nt), respectively, ex-Midwest mill. However, sources have indicated that sub-$35.00 cwt. ex-mill deals are also available, and mill order books for July are still extremely light, therefore it wouldn't take a big order to get a lower price.

While US domestic flats prices are falling, import offer prices to the US have remained neutral in the last week and are now higher than US prices. Even Mexican flats mills, which normally mirror the price trend of their northern neighbor, have not yet dropped their prices, but are expected to in the next couple weeks to keep their market share.

Keeping offer prices in line or just under US prices has boded well for Mexican mills in the last couple months, which is evidenced by latest US Steel Import Monitoring and Analysis (SIMA) data.  Last month, arriving imports of hot rolled sheet from Mexico jumped to 21,454 mt (license data) compared to 15,863 mt arriving in May (preliminary census data). Another major exporter of hot rolled sheet to the US last month was Russia, which exported 23,245 mt in June compared to 7,866 mt in May and 1,595 mt in April.

**DDP loaded truck in US West Coast ports