US flat rolled market leveling off further

There has been much speculation over the past several weeks regarding whether the US flat rolled market would be able to sustain its price increases through the fourth quarter. The short answer to that is no.  While October prices have, for the most part, stuck, it has become apparent that domestic mills are not going to be able to remain firm on November prices.

Hot Rolled Coil (HRC) prices have been soft for several weeks, due in most part to the struggling pipe, tube and plate markets. Even the last couple mill increases were driven more by rising raw material costs and a tight galvanized market- HRC just rolled along with it. However, mills are no longer able to keep HRC prices firm and spot prices now range from approximately $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) ex-Midwest mills, down by an average $1.00 cwt ($22 /mt or $20 /nt) since last week. Many larger customers with sizable tonnage were able to contract at the lower end of the range for the past couple weeks but now there are no offers higher than $28.00 cwt. As demand is expected to wane even further through the holiday season, domestic mills will continue to do their best not to drop prices further; however, they're not going to give up on a possible order either.

Meanwhile, most domestic cold rolled coil (CRC) spot offers have also showed some signs of softness, though not as much as HRC, over the past week. Most CRC offers can still be found for around $33.00 cwt. ($728 /mt or $660 /nt) ex-Midwest mills on the low end; however, the higher end of the range has shrunk down to about $34.00 cwt. ($750 /mt or $680 /nt) ex-Midwest mills, making the average price drop by $0.50 cwt ($11 /mt or $20 /nt) since last week. CRC benefitted from the tight galvanized market through the summer but as the fourth quarter gets underway, there will be less demand for it, thus negatively affecting CRC.

Prices in general have not gone down per se, but the earlier bullish price increases for December appear to be going nowhere.

On the import side, most HRC and CRC offers have remained the same since last week, except a notable decrease in Mexican offers, and despite the amount of inquiries being slightly up in recent weeks, there is little expectation of seeing anything too interesting in the coming weeks. Buyers remain very cautious; however, imports could see a slight uptick in activity at the end of the fourth quarter for arrivals at the end of the first quarter for potential construction projects next spring.

Regarding HRC, Mexico is really the only viable source importing tonnage to the US. Mexican mills have also decreased offers by about $1.00 cwt. ($22 /mt or $20 /nt) since last week, with most now offers ranging from approximately $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) delivered to the border crossing.

CRC offers have not changed since last week. Brazilian offers remain at around $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) duty-paid, FOB loaded truck in US Gulf ports, Chinese and Indian offers continue to be at $35.00 cwt. ($772 /mt or $700 /nt) duty-paid, FOB loaded truck in US Gulf ports, and higher, and Mexican offers remain in the range of $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) delivered to the border crossing. Mexico is offering very limited tonnage. Meanwhile, Asian import CRC inquiries may pick up a little over the next several weeks, as prices are expected to soften in light of their respective weakened flat rolled markets, but it probably will not have very much impact for traders.