US flat rolled numbers take another tumble

US domestic flat rolled spot prices have slid another couple of dollars per hundred weight (cwt.) since SteelOrbis' last report of two weeks ago, as US demand has continued to weaken and customers still aren't buying.

Although none of the "big three" flat rolled producers have made an official pricing announcement for October orders, spot prices have trailed off and mills are willing to negotiate with buyers and lower their numbers in order to get the business. On average, domestic flat rolled spot prices have fallen approximately $3.00 cwt. to $4.00 cwt. ($66 /mt to $88 /mt or $60 /nt to $80 /nt) in the last two weeks, and the trend is still pointing down. 

Current spot prices for hot rolled coils (HRC) now range anywhere from $45.00 cwt. to $50.00 cwt. ($992 /mt to $1,102 /mt or $900 /nt to $1,000 /nt) ex-mill Midwest. Although this is a wide range, most buyers are finding prices right in the middle of it. Some companies that are only purchasing a small amount of tonnage have reported numbers that are closer to the top of this range, while large buyers are finding numbers closer to $45.00 cwt. ($992 /mt or $900 /nt). 

Cold rolled coil (CRC) spot prices are also demonstrating a wide range, though most buyers are also purchasing their material for prices right in the middle. Spot prices for CRC are now ranging from $50.00 cwt. to $53.00 cwt. ($1,102 /mt to $1,168 /mt or $1,000 /nt to $1,060 /nt) ex-mill Midwest. 

Excess contract tonnage that is still present in the market can be purchased at levels below $50.00 cwt.; however, lately spot prices have been sliding so much that the gap between the contract price and spot price is narrowing, especially with the recent $14.00 cwt. ($309 /mt or $280 /nt) raw materials surcharge decrease that took place. 

As demand falters, it is expected that the domestic flat rolled mills will begin cutting production, although, as of late, there have not been any major production cuts reported. The mills have been shifting production rather than cutting production, which may have led to the declining HRC numbers. When the galvanized market began showing signs of weakness and the HRC market was still rather strong, mills shifted production away from galvanized products and to HRC in an attempt to drum up more business. Now that HRC demand has down-shifted as well, there is an excess of capacity and mills have been forced to lower their numbers. 

On the service center level, as released from the Metal Service Center Institute on September 17, 2008, shipments of steel products by US service centers in August declined 16.8 percent from the same month of the previous year. Inventory levels at US service centers were slightly higher in August of 2008 when compared to last year as well. 

Going forward, no rebound is expected in the short term, but by the first quarter of next year, the market may see some strengthening and witness a price increase. 

On the import side, Mexican HRC is still being offered at the bottom end of the US domestic price range. HRC from Mexico is currently offered for $45.00 cwt. to $47.00 cwt. ($992 /mt to $1,036 /mt or $900 /nt to $940 /nt) at the border.

Other than the offers from Mexico, import HRC offers are virtually non-existent. CRC offers from both India and China are still available, though they might not get much traction as they are at or above the domestic level.

Chinese CRC offers are in the range of $51.00 cwt. to $53.00 cwt. ($1,124 /mt to $1,168 /mt or $1,020 /nt to $1,060 /nt) duty-paid, FOB loaded truck, West Coast ports.

India has also been offering CRC to the US, although their offering range is significantly higher than US domestic numbers, making the Indian price level impossible to sell at right now. Indian CRC offers to the US are ranging from $58.00 cwt. to $60.00 cwt. ($1,279 /mt to $1,323 /mt or $1,160 /nt to $1,200 /nt) duty-paid, FOB loaded truck, Gulf ports.