The US flat rolled market continued its slump last week as prices across the board decreased; however, it is only a matter of time before the prices hit bottom and stabilize. The million dollar question remains: "When exactly will the bottom be seen?"
Hot rolled coil (HRC) spot price offers from domestic mills consistently declined by about another $3.00 cwt. ($66 /mt or $60 /nt) since our report the previous week and most prices now range from approximately $32.00 cwt. to $35.00 cwt. ($705 /mt to $772 /mt or $640 /nt to $700 /nt) ex-mill in the Midwest. SteelOrbis has learned that Nucor's contract prices have also declined to an average range of $27.00 cwt. to $28.00 cwt. As a result, HRC domestic spot prices could drop below the $30.00 cwt. ($661 /mt or $600 /nt) range within a couple of weeks.
Domestic cold rolled coil (CRC) spot offers declined by about another $2.00 cwt. ($44 /mt or $40 /nt) from the previous week and most are now in the range of around $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt).
This market is still very difficult to predict. Mills continue to cut production in an effort to lower operating costs. One trader told SteelOrbis, "I don't know of a single steel mill that hasn't cut down on production." While production and domestic flat rolled product prices continue to decline, many industry professionals believe the bottom of the market is quickly approaching.
Busheling scrap prices pave the way, so to speak, for flat rolled prices. Last week busheling scrap prices did not decrease for the first time in several weeks, and sources indicate that there is probably only about another $100 /nt ($5.00 cwt. or $110 /mt) left of a domestic flat rolled price decrease before reaching the bottom. Considering the swift pace at which prices have been decreasing, we may see the bottoming out of the flat rolled market by the end of November.
Import offers continue to be aggressive as a result of decreasing overseas freight costs and slowing business, but there remains little buying activity.
Russia appears to have become the most competitive import player to challenge domestic business with HRC offerings in the range of about $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt), duty-paid FOB loaded truck in US Gulf ports.
Mexico is offering HRC to the US at the border crossing in the range of about $30.00 cwt. to $33.00 cwt. ($661 /mt to $728 /mt or $600 /nt to $660 /nt), which is about a $5.00 cwt. ($110 /mt or $100 /nt) decrease from the previous week's offerings. Mexico also lowered their CRC offers by about $2.00 cwt. ($44 /mt or $40 /nt) from the week before, to the range of about $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760 /nt).
China also continues to try and attract business, decreasing their CRC offerings by about $4.00 cwt. ($88 /mt or $80 /nt) from the week before, to the range of $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt) duty-paid, FOB loaded truck in US Gulf or West Coast ports.
India is offering CRC to the US in the upper $38.00 cwt. ($838 /mt or $760 /nt) range, duty-paid, FOB loaded truck in US Gulf ports, while Brazil CRC offers are about $40 cwt. ($882 /mt or $800 /nt) duty-paid, FOB loaded truck in US Gulf ports, and higher.