Although US flat rolled mills announced price increases for September orders, buyers are telling SteelOrbis that in actuality, spot prices haven't really moved up a notch.
In recent weeks, all major US flat rolled producers announced increases for September orders. Nucor Sheet Mill Group, ArcelorMittal, and US Steel all pushed their official prices up by $40 /nt ($2.00 cwt. or $44 /mt), while AK Steel announced a $50 /nt ($2.50 cwt. or $55 /mt) increase. Even West Coast mill CSI announced a $20 /nt ($1.00 cwt. or $22 /mt) increase for September orders. USS-POSCO, however, decided to keep September prices at August levels.
Despite mills citing increased demand and/or rising raw materials costs for their reasoning behind the September price increases, buyers tell a different story. Flat rolled buyers have told SteelOrbis that demand is faltering. Lack of demand due to automotive cutbacks as well as the weak residential construction market and the typical summer doldrums are preventing mills from getting their list prices. The buying frenzy that was taking place a couple months ago is now over.
Most US spot prices for domestic hot rolled coils (HRC) are now at approximately $53.00 cwt. to $55.00 cwt. ($1,168 /mt to $1,213 /mt or $1,060 /nt to $1,100 /nt) ex-mill Midwest. West Coast prices are on average $3.00 cwt. ($66 /mt or $60 /nt) higher.
The market for cold rolled coils (CRC) is even weaker than that of HRC. Not only is demand weaker, but contract tons that are priced at lower levels than spot prices are continuing to make their way into the market. Some customers that buy on a contract basis are reselling the material for more than what they paid contract, but less than the going spot price. Because of this and the weakening demand, domestic mills have in many cases been making deals with customers, offering lower prices.
On the cold rolled coil (CRC) side, spot prices are as low as $56.00 cwt. to $58.00 cwt. ($1,235 /mt to $1,279 /mt or $1,120 /nt to $1,160 /nt) ex-mill Midwest. According to mills' list prices, however, domestic CRC prices should range from $60.00 cwt. to $61.50 cwt. ($1,323 /mt to $1,356 /mt or $1,200 /nt to $1,230 /nt) ex-mill Midwest, depending on the mill. But the reality on the open market is very different.
So if US domestic prices are at best the same as, if not slightly lower than August levels, then why the increases from mills? Many buyers believe that the market was seeing a downward trend, so in order to keep prices from falling further, US mills upped their prices, hoping that the worst case scenario would be prices staying stable. Also, pushing for an increase now will give mills a better chance for an increase in October, showing strength going into the fourth quarter.
On the import side, there are limited offers from China. Chinese mills have decreased their offering price slightly in order to try to match domestic levels. CRC offers from China are now in the range of $57.00 cwt. to $59.00 cwt. ($1,257 /mt to $1,301 /mt or $1,140 /nt to $1,180 /nt) FOB loaded truck West Coast ports. Offers are for late fourth quarter deliveries.