US flat rolled mills hike prices again

Although flat rolled consumption in the US is still slow, the market continues to trend up due to raw material cost increases as well as the strong foreign markets that are keeping the amount of flat rolled imports to the US at negligible levels. Several weeks after announcing price hikes for March orders of hot rolled coils, US flat producers AK Steel and Nucor have both announced price increases for April shipments of their flat rolled products. The announced April increases exceed the March increases, with Nucor raising their sheet pricing $40 /nt ($44 /mt or $2.00 cwt.) in April compared to the $30 /nt ($33 /mt or $1.50 cwt.) increase in March. AK Steel also announced a $40 /nt increase for sheet products in April, followed by another price increase announced Monday of an additional $30 /nt for hot rolled shipments in April, and $20 /nt ($22 /mt or $1.00 cwt.) for cold rolled shipments in April. If the April price increases go through, hot rolled coil prices will have risen a hefty $100 /nt ($110 /mt or $5.00 cwt.) from February prices and cold rolled will have risen $90 /nt. However, the domestic mills' price increases for flat products seem to contradict the current lackluster state of the market. Sources say that flat rolled consumption is still relatively weak, and that inventories have not been entirely worked down yet. There also doesn't seem to be a flurry of service center buying activity to hedge against the price increases. Still, more bullish market-watchers expect the market to accept the announced increases due to the escalating price of scrap as well as the strength of import prices - much of which are higher than domestic levels. Nevertheless, it is important to stress that the domestic price increases are mostly raw materials-driven rather than demand-driven. For now, most domestic hot rolled coil offers still range from $25.50 to $27.50 cwt. ($562 /mt to $606 /mt or $510 /nt to $550 /nt) FOB mill, while most cold rolled offers range from $30.50 to $32.50 ($672 /mt to $717 /mt or $610 /nt to $650 /nt) FOB mill. The pricing trend for import flat rolled remains strongly up, as foreign mills' offers for the US are not very attractive to US buyers, due to the strength of the domestic markets in typical import source countries like Russia, Ukraine, and Turkey. In fact, the foreign flat rolled markets are so hot that some domestic mini mills, as well as some integrated mills, are now exporting flat rolled products to Europe. The weak US dollar along with the strong Euro and strong flat rolled markets in Europe make it more feasible for domestic mills to export right now. However, US export offers to Europe should disappear once US consumption is back to normal. The US is an occasional exporter of flat rolled products since under normal circumstances, US consumption exceeds domestic flat rolled production. However, US mills are slowly learning not to dump their excess production into the local market and ruin their local prices. Besides the European and Middle Eastern markets, sources also say that the Mexican market is continuing to improve, though at a rather slow pace. Imports coming from Mexico are also getting scarce. Along with rising foreign markets, import offers are rising for the US as well. Quotes went up by $1.00 cwt. in the last two weeks. There are very few import offers on the market right now, but most hot rolled offers available now range from $28.00 cwt. to $29.00 cwt. ($617 /mt to $639 /mt or $560 /nt to $580 /nt) FOB loaded truck, in US Gulf ports, and the cold rolled offers now range from $30.00 cwt. to $32.00 cwt. ($661 /mt to $705 /mt or $600 /nt to $640 /nt) FOB loaded-truck in US Gulf and West Coast ports. Most hot rolled and cold rolled import offers are not workable currently. However, coated product imports are finding some acceptance in the marketplace.