US flat rolled market – Domestic spot prices surge on raw material costs, tight supplies

Following the recent price hikes set by US domestic mills, spot prices for domestic flat rolled coils in the US have moved up significantly in the past two weeks.
 
With AK Steel raising their spot prices by $150 /nt ($165 /mt or $7.50 cwt.) effective as of April 7 (in addition to their previously announced spot price increases of $50 /nt  effective March 24 and another $70 /nt increase, to go into effect May 1), and Nucor raising their flat rolled numbers by $180 /nt for June shipments (in addition to their  $70 /nt price hike for May shipments), US HRC and CRC prices on the spot market have jumped from approximately $9.00 cwt. to $10.00 cwt. ($198 /mt to $220 /mt or $180 /nt to $200 /nt) in the past two weeks. US Steel and ArcelorMittal have yet to announce similar price increases for their flat rolled products, but they are expected to follow in the direction of AK and Nucor, raising their numbers by at least another $150 /nt this spring.
 
Current spot prices for domestic HRC run from $49.00 cwt. to $51.00 cwt. ($1,080 /mt to $1,124 /mt or $980 /nt to $1,020 /nt) ex-mill, while CRC ranges from $54.00 cwt. to $56.00 cwt. ($1,191 /mt to $1,235 /mt or $1,080 /nt to $1,120 /nt) ex-mill.
 
Even with these significant increases, the pricing trend for domestic flat rolled remains up as rising raw material costs and the lack of available imports are still creating a supply-driven market. Domestic mills are busy and customers are buying, though end-use demand has not improved. The upcoming summer season may result in an increase in construction activity, although automotive and manufacturing typically slow down in the summer. Despite the upward cost push and dearth of import supplies, there is a chance that domestic flat rolled prices may start to correct in the third quarter with supplies possibly being replenished by that time; however, due to the high steelmaking costs, no major fallout in pricing is expected.
 
In addition to stockists and service centers in the US, mills are also seeing good business from the export market. Export activity remains active, primarily to Latin America and Mexico. Some exports go to Europe, but obtaining vessels can be difficult.
 
Imports remain scarce, with virtually no hot rolled offers available. There are some cold rolled coil offers from China, though availability is limited and prices are continually rising. Currently, there are some Chinese cold rolled offers ranging from $49.00 cwt. to $50.00 cwt. ($1,080 /mt to $1,102 /mt or $980 /nt to $1,000 /nt) FOB loaded truck, in US Gulf ports. However, traders say that there are some odd offers up to $100 /nt higher than this level, and all offers are expected to rise by at least that amount quite soon. Due to the strong increases in the US prices in recent weeks, Chinese mills are expected to raise their numbers by the amount that domestic prices have risen when they come out with their new offers.
 
There is some question as to whether imports will start surging in quantity due to the skyrocketing domestic prices; compared to the new domestic numbers, imports may start to look more competitive. It is possible that imports may eventually regain a bigger chunk of the US flat rolled market share. For now, however, the global flat rolled markets remain strong, and so import mills continue to raise their prices for the US, matching or surpassing the domestic price increases. The weak USD, high ocean freight rates and lack of available vessels are also factors that should continue to keep import arrivals to a minimum.