The domestic and import markets for flat rolled products in the US remain depressed, and even bullish market players cannot deny that it will take a significant amount of time for the situation to turn around.
Offering prices for hot rolled coils have come down by $20 /nt ($1.00 cwt. or $22 /mt) over the past two weeks, now ranging from $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt) FOB loaded truck, US Gulf ports. Domestic cold rolled offers now range from $33.50 cwt. to $34.50 cwt. ($739 /mt to $761 /mt or $670 /nt to $690 /nt) FOB loaded truck, US Gulf ports.
The domestic pricing trend for flat rolled products is still down, and there is no apparent end in sight to this price depreciation. The major reasons for the softening prices are slowing demand and high service center inventories. Mills are doing what they can to control
production. Mittal,
US Steel, and AK Steel are all taking steps to cut back significantly on output, while smaller flat rolled producers like SDI and
Nucor are cutting back as well. While the mills remain optimistic about the effects their cutbacks will have on the market, no one can deny that it will take at least several months to burn off the excess inventories.
The only flat rolled product that is showing any strength both domestically and for imports is hot dipped
galvanized coils. This is because zinc prices are at an all-time high, now reaching a record $4,202 /mt, as reported by the London Metal Exchange this week. Zinc prices have risen as a result of high demand and lower global stockpiles.
On the import side,
Mexico's domestic flat rolled market is still very weak, and mills are dropping their export prices for the US since there is no interest in their home market.
Mexico is currently the most aggressively priced import source for hot rolled coils, priced $2.00 cwt. to $3.00 cwt. lower than European sources.
Mexico is also shipping
HRC to
Europe at competitive rates. The weak state of the Mexican flat rolled market is affecting the US domestic market adversely; Mexican steel prices used to be comparable to US prices, but
Mexico is now a new source for low-priced imports.
In general, import flat rolled prices have come down by $20 /nt since last month, with most hot rolled offers ranging from $28.00 cwt. to $29.00 cwt. ($617 /mt to $639 /mt or $560 /nt to $580 /nt) FOB loaded truck, US Gulf ports and cold rolled ranging from $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB loaded truck, US Gulf and West Coast ports.
Business is very slow on the import side, and new bookings are virtually nonexistent, especially on the cold rolled end. Potential buyers in the US are holding out on ordering, as they expect import prices to drop further, or else they are planning to negotiate discounts with domestic producers.