The US domestic flat rolled market has been enduring a quiet and uneasy first two months of 2009. Prices have been teetering around at low levels, as steel professionals continue to look for any positive signs of a demand up-tick that would prevent prices from falling further.
A minor flat rolled price increase on the domestic mill level back in January was quickly offset by a minor price decrease earlier this month. With the recent scrap price declines and weak demand, just about everyone in the industry is just trying to survive until the economy and demand improve.
One potential bright spot for the flat rolled industry is that according to the most recent Metal Service Center Institute (MSCI) shipment and inventory report, daily shipments of flat rolled products from service centers in the United States increased from an estimated 59,000 nt in December to nearly 72,000 nt in January, reflecting the first month-over-month daily shipment increase since August 2008. And while total service center inventory levels for flat rolled products in January and December were comparable, at 4.54 million nt and 4.68 million nt respectively, month-on-hand inventory levels in December totaled 3.6 months, compared to only about 3.0 months in January, which marked the first month-on-hand level decrease since April 2008.
However, one month of improved shipment levels is not yet a cause for celebration, especially since the January inventory data pale in comparison to those of January 2008, when daily shipments totaled 123,000 nt and only about 2.0 months of inventory were on-hand in most warehouses.
Nevertheless, domestic hot rolled coil (HRC) spot prices have remained unchanged from our report last week and are still in the range of approximately $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt) ex-mill in the Midwest. The price trend is expected to remain neutral over the next week but it is experiencing some downward pressure, and while an official decrease may not be on the horizon, spot prices could drop a little further in the coming weeks.
Most domestic cold rolled coil (CRC) spot prices have also trended neutral from last week and continue to be in the range of about $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt) ex-mill in the Midwest. Much like domestic HRC, most transactions are transpiring at the bottom of this range, with the possibility to further negotiate for significant tonnage and quick delivery orders.
The import market appears to becoming a little more aggressive than in previous weeks. This may not necessarily result in many bookings, considering customers' hesitancy to take on longer import lead times while the market is still fluctuating, but traders have become a little more aware of these offers' existence.
Indian mills appear to have gotten back in the bidding war for CRC imports to the US, as they try to drum up some last minute business to end their fiscal year in March. In order to do this, they will most likely have to offer discounts and reduce pricing from their current range of about $28.00 cwt. to $30.00 cwt. ($617 /mt to $661 /mt or $560 /nt to $600 /nt) duty-paid, FOB loaded truck in US Gulf ports.
South American CRC import offers to the US also continue to be active, after recently emerging as one of the most competitive sources. Brazil, Venezuela and Argentina are the South American front-runners and are all in the same approximate range as last week, along with Mexico and Turkey, of $27.00 cwt. to $29.00 cwt. ($595 /mt to $639 /mt or $540 /nt to 580 /nt). South American and Turkish offers are duty-paid, FOB loaded truck in US Gulf ports, while Mexican offers are delivered to the US at the border crossing.
HRC import offers from Mexico and Turkey to the US have remained neutral from last week, and continue to be in the range of approximately $23.00 cwt. to $25.00 cwt. ($507 /mt to $551 /mt or $460 /nt to $500 /nt). Mexico's offers are delivered to the US at the border crossing, while Turkish offers are duty-paid, FOB loaded truck in US Gulf ports. Price ranges from both countries are said to be flexible, with the ability to negotiate for significant tonnage.
Licensing data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that Canada exported the most HRC tonnage to the US during January, with 42,230 mt. The next three countries exporting the most HRC tonnage to the US during that time frame were South Korea, Mexico, and Australia, with 28,301 mt, 22,380 mt, and 20,477 mt respectively.
On the CRC side, according to licensing data, Mexico exported the most tonnage to the US during January, with 17,576 mt. Canada, China, and Brazil were the next three top CRC exporters to the US, with 14,551 mt, 13,335 mt, and 10,741 mt respectively.