US domestic flats prices drop but increase announcement likely

Even as mills aggressively cut prices to attract orders, rumors of a price increase by month's end are growing more pronounced. The US domestic flat rolled spot price range has declined in the last week, after individual mill deals became more widespread--hot rolled coil (HRC) and cold rolled coil (CRC) spots fell $1.00 cwt. ($22/mt or $20/nt). HRC spot prices are now between $29.00-$31.00 cwt. ($639-$683/mt or $580-$620/nt) ex-Midwest mill as average buyers are now easily able to attain sub-$31.00 cwt. pricing. Further, a few select deals have been heard just under $29.00 cwt. as well. Sources anticipate that because a decent amount of customers have orders to place and rumors of a price increase in the next week or two have emerged, the new lower prices are likely to spur a slight pickup in booking activity.

The impact of a price increase remains questionable, and if there isn't enough demand to support an upward move or scrap prices in February soften (most predictions currently point to a sideways move but a decline is also a possibility), it may have little actual impact on spot prices. With US domestic prices falling in the last week, they are now under import offers to the US, making futures unappealing to most. Chinese CFR offer prices from major mills have increased by about $20/mt since last week, but with second-tier mills offering prices slightly lower, the sales price in the US is still mostly within the range of $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) DDP loaded truck in US Gulf ports, with some traders cutting their own margins and offering Chinese CRC at slightly lower prices.

**DDP loaded truck delivered into Houston