The fundamental flaw in pricing for HRC and CRC continues to lie in mismatched supply and demand. On one hand, you have the ongoing pricing increases for scrap and iron ore. Iron ore cost alone has almost doubled within the past year and scrap prices are widely anticipated to rise at least another $30/lt to $40/lt ($30/mt to $39/mt or $27nt to $36/nt) come April. Logic, then, would support the price of flat rolled steel following suit. However, some mills reportedly have lead times as low as two to three weeks for flats products, which is indicative that order books have begun to soften, and more than a few people are wondering where the breaking point lies. While some fear a repeat of the great pricing apocalypse of 2008, others wonder if this year will harbor more of a plateau because the production costs remain high. At current, speculation is running wild on both ends of that spectrum, and it's too soon to make a firm call as to what the magic eight ball will tell us. For now, though, the immediate trend for the flat rolled market is still slightly up, but acceptance of mills' asking prices will continue to lag. Nevertheless, this will not stop domestic mills from announcing another increase for May in the upcoming weeks.
The low end of most domestic HRC spot prices has increased approximately $1.00 cwt. ($22/mt or $20/nt) since last week and now ranges from approximately $33.00 cwt. to $34.00 cwt. ($728/mt to $750/mt or $660/nt to $680/nt) ex-Midwest mills. In related news, the CRC market has continued to remain stronger than its HRC counterpart, with the range in spot prices having increased approximately $1.00 cwt. ($22/mt or $20/nt) since last week with most offers now being seen at approximately $38.00 cwt. to $40.00 cwt. ($838/mt to $882/mt or $760/nt to $800/nt) ex-Midwest mills
Taking a look at imports, not much has changed in recent weeks. Mexican HRC has trended up slightly since our last report, with offers having increased approximately $0.50 cwt. ($11/mt or $10/nt). Meaning, Mexican offers are now being seen at about $33.00 cwt. to $34.00 cwt. ($728/mt to $750/mt or $660/mt to $680/mt) delivered to customers in Texas. However, Mexican mills aren't too eager to export to the US right now and any bookings will usually come in the form of smaller tonnages. Glancing overseas, Russian CRC offers may still be lingering in the market at prices reported last week, $40.00 cwt. to $41.00 cwt. ($882 to $904/mt or $800/nt to $820/nt), FOB loaded truck in US Gulf ports, but new prices are expected to be announced by the beginning of next week While there are still some import offers available to the domestic market, takers remain few and far between. The previous players, India, Taiwan, and Korea, have fallen off the map for HRC and CRC, and will continue to remain on the sidelines until the raw materials pricing situation becomes more clear.