The close to 50 percent reduction in US flat rolled production has yet to make a big dent in the relentless downward trend of flat rolled prices. After months of significant week-over-week price declines in the flat rolled market, price decreases have started slowing down over the past few weeks, and many believed the bottom of the market was just around the corner. But as the weeks have gone by, the market still has not reached its lowest point, and the price declines continue.
Most domestic hot rolled coil (HRC) spot prices declined by about $2.00 cwt. ($44 /mt or $40 /nt) this week and now range from approximately $24.00 cwt. to $27.00 cwt. ($529 /mt to $617 /mt or $480 /nt to $560 /nt) ex-mill in the Midwest. Despite the lower HRC prices, buyers are not stepping up and, demand is expected to continue to remain weak through at least the holiday season.
Most domestic cold rolled coil (CRC) spot price offers also dropped by about another $2.00 cwt. ($44 /mt or $40 /nt) over the past week and are now in the range of about $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt).
Some buyers now believe that market prices have over-adjusted, as inventory levels continue to decrease, and that the market is due for a slight price increase. Furthermore, busheling scrap prices have increased by over $100 /lt since last month, and the raw material surcharge for scrap based flat products is bound to go up by $135/ nt ($6.75 cwt. or $149 /mt) according to index that Nucor is using for their raw material surcharge calculations. However, a net price increase of $135 /nt ($6.75 cwt. or $149 /mt) is totally out of question at this point, given the continued weak demand. Still, we may be close to the point where mills may be forced to initiate price increases if scrap prices continue to increase.
On the import side, even though overall price offerings declined by a similar margin as domestics, there continues to be push-back from foreign mills. Some are still willing to negotiate deals, while others are becoming reluctant to do so. This will most likely contribute to the weak import demand, especially as lengthening lead times continue to be an issue.
Brazil, one of the higher-priced import CRC sources, recently dropped their numbers in order to move some tons to the US. Brazil’s CRC offers continue to be higher than some other countries but their range is now within $31.00 cwt. to $33.00 cwt. ($683 /mt to $728 /mt or $620 /nt to $660 /nt) duty-paid, FOB loaded truck in US Gulf ports, which reflects about a $5.00 cwt. ($110/mt or $100 /nt) decrease from last week.
India’s, China’s and Mexico’s import CRC offers all declined by about an additional $2.00 cwt. ($44 /mt or $40 /nt) this week and are now in the range of about $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt). India and China’s offers are duty-paid, FOB loaded truck in US Gulf ports, while Mexico’s offers are delivered to the US at the border crossing.
Mexico’s HRC offers also declined by about $2.00 cwt. ($44 /mt or $40 /nt) and are now in a range similar to that of domestic offers at about $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt), delivered to the US at the border crossing.
Russia continues to keep pace with Mexico’s HRC offers and have lowered their HRC offers by $2.00 cwt. ($44 /mt or $40 /nt) with most offers now ranging from $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt), duty-paid FOB loaded truck in US Gulf ports.
Preliminary census data from the US Steel Import Monitoring and Analysis System (SIMA) show that the total amount of import HRC arriving in the US during October was 166,707 mt, which is 72,989 mt, or about 30 percent less than the 239,696 mt imported in September. The largest quantities of import HRC in the October period came from: Canada, at 50,665 mt; Australia, at 22,089 mt; Korea, at 32,012 mt; Netherlands, at 30,938 mt; and Mexico, at 14,591 mt.
Total tonnages of import CRC arriving in the US during October were 101,143 mt, which is 19,479 mt, or 19 percent more than the 81,664 mt imported in September. The largest quantities of import CRC in the October period came from: China, at 31,922 mt; Canada, at 20,039; Netherlands, at 12,702; and Brazil, at 12,036.