The US domestic market for flat rolled products is still slow, though after dropping significantly in November, prices are now coming closer to bottoming out.
Most domestic hot rolled coil offers remain at the same pricing level as our last report two weeks ago, still ranging from $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) FOB mill, while cold rolled coil prices range from approximately $31.50 cwt. to $33.50 cwt. ($694 /mt to $739 /mt or $630 /nt to $670 /nt) FOB mill.
Sources say that mini-mills and smaller producers like AK Steel are offering at the lower end of the pricing spectrum, remaining competitive in order to move tonnage during this slow period. In recent weeks,
Nucor, Mittal and
US Steel have managed to maintain prices at the higher end of the spectrum, though bookings have been very light, and the price gap between these larger mills and the smaller mills has significantly narrowed.
As we mentioned in our last report, factors contributing to the downward pricing trend of domestic flat rolled products include high inventories, the declining health of the US
automotive industry, along with the slowing US economy in general. However, most steel professionals and economic analysts expect the flat rolled market to rebound by late Q1 or early Q2 at the latest, once inventories work down and demand picks up again.
Currently, inventory levels remain a problem for the US flat rolled market and for the
US steel market at large. According to a recent report from The Metal Service Center Institute (MSCI), at the current shipping rate, steel inventories represent a 3.8-month supply, 5.7 percent higher than October 2006 and 37.7 percent higher than November 2005.
The import flat rolled market has been even quieter than the domestic market, as the weak US dollar in comparison to other major currencies makes import prices unattractive, especially with added logistics costs and the hassle of long lead times. Traders predict the number of flat rolled imports to slow down significantly in the first half of 2007, which will bode well for the supply situation in the US.
In general, after falling last month, import prices have stayed relatively stable in December, with import hot rolled coils still ranging from $25.00 cwt. to $27.00 cwt. ($551 /mt to $595 /mt or $500 /nt to $540 /nt) FOB loaded truck, in US Gulf ports. Russian
HRC dominates the lower end of the spectrum. Cold rolled coil imports range from $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt) FOB loaded-truck in US Gulf and West Coast ports.
As we reported two weeks ago, the competitive offers from
Mexico have slowed down to a near-halt, though sources say that there is still some availability from Hylsa and Ahmsa. Canadian offers are now the most aggressively priced flat rolled imports on the market.
Preliminary license data from the
US Steel Import Monitor shows that during the month of November 2006, the following countries exported the most hot rolled sheet to the US:
Malaysia, at 58,085 mt;
Canada, at 48,593 mt;
Netherlands, at 40,257 mt;
Korea, at 33,619 mt; and
Mexico, at 30,478 mt.
In November 2006, the most cold rolled sheet imports came from:
Russia, at 34,899 mt;
China, at 32,395 mt;
Brazil, at 22,404 mt;
Taiwan, at 20,857 mt; and
Canada, at 19,329 mt.