Low prices, low inventory, low demand and low volumes are the buzzwords many are using to describe the US flat rolled market as the holiday season begins.
While the low service center inventories, coupled with significant mill production cuts (about 35 percent since the beginning of September), could suggest that the price decreases will finally be over soon, the lower demand and shipping volumes for flat rolled products also indicate that, even if the bottom of the market is near, we may stay there for a while before experiencing any significant rebound.
Going forward, buyer mentality will play a vital role in which way the market goes over the next several months. As layoffs and business closings have become more prevalent, flat rolled buyers remain cautious. Credit and accounts receivable are watched more closely and the emphasis is less on making the next sale and more on maintaining their customer base.
Since last week, most domestic hot rolled coil (HRC) spot prices declined slightly for consecutive weeks by about another $1.00 cwt. ($22 /mt or $20 /nt), and now range from approximately $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) ex-mill in the Midwest. Despite the lower numbers, buying activity has been minimal, as is typical for the holiday season.
Most domestic cold rolled coil (CRC) spot price offers also fell by about another $1.00 cwt. ($22 /mt or $20 /nt) for consecutive weeks and are now in the range of about $31.00 cwt. to $33.00 cwt. ($683 /mt to $728 /mt or $620 /nt to $660 /nt).
As far as inventories are concerned, according to the latest Metal Service Center Institute (MSCI) inventory report, US service center inventories in October totaled about 5.5 million tons, which shows about a 10 percent decrease from September; however, flat rolled product shipments decreased by an estimated 13 percent from 1.05 million tons in September to about 0.91 million tons in October. Domestic mill production and service center inventories continue to decline but flat rolled product shipments and demand for the products have been declining even by a greater degree.
On the import side, foreign mills, too, have started cutting production and are becoming increasingly reluctant to continue cutting prices by drastic margins. They remain aggressive in attempting to initiate orders, but the lack of demand and comparable if not lower-priced domestic offers are resulting in few import bookings.
Turkey has continued to be the most aggressive country on CRC imports, with offerings at about $28.00 cwt. to $30.00 cwt, duty-paid FOB loaded truck in US East and Gulf Coast ports.
India's import CRC offers continued to decline this week, by another $1.00 cwt. ($22 /mt or $20 /nt), and are now in the range of about $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.
Brazil's CRC import offers remained unchanged this week and, while they are still active, their rates are significantly higher than competitors' at about $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Mexico's and China's CRC offers remained unchanged this week and are within the range of $31.00 cwt. to $33.00 cwt. ($683 /mt to $728 /mt or $620 /nt to $660 /nt). Mexico's offers are delivered to the US at the border crossing, while China's offers are duty-paid, FOB loaded truck in US Gulf or West Coast ports.
Mexico's HRC offers declined by about $1.00 cwt. ($22 /mt or $20 /nt) and are now in a range similar to domestic offers of about $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt), delivered to the US at the border crossing.
Russia stayed competitive with Mexico and lowered their HRC offers again by about $1.00 cwt. ($22 /mt or $20 /nt) and are now also within the range of $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt), duty-paid FOB loaded truck in US Gulf ports.