Domestic flat rolled mills have not announced June pricing yet, but spot prices for HRC and CRC have moved up approximately $0.50 cwt. to $2.00 cwt. ($11 /mt to $44 /mt or $10 /nt to $40 /nt) in the last two weeks.
Following AK Steel's recent $50 /nt ($55 /mt or $2.50 cwt.) price hike for flat rolled products, effective immediately, and in addition to their previously announced price increase of $70 /nt ($77 /mt or $3.50 cwt.) effective for May orders, domestic spot offers for hot rolled coils have reached a new range of $40.00 cwt. to $42.50 cwt. ($882 /mt to $937 /mt or $800 /nt to $850 /nt) FOB mill, while cold rolled offers range from $45.00 cwt. to $47.50 cwt. ($992 /mt to $1,047 /mt or $900 /nt to $950 /nt). The gap between high and low prices is larger than usual due to the rapidly accelerating market.
Currently, hot rolled coils are thought to be the strongest of the flat rolled products due to the lack of imports, while galvanized and cold rolled are weaker due to the trickle of import arrivals. Still, even imports of galvanized and cold rolled remain much lower than in normal market conditions, making for tight markets for all of the flat rolled products in the US.
Mills are not in a hurry to announce June pricing yet, but a lot of people think that June prices will be a lot higher than $42.50 cwt. End-use demand remains relatively flat, but customers have very limited import options, and it is expected that domestic mills will continue raising their prices until imports return, or until customers start saying "no." But if demand continues to be lackluster, a possible slowdown is expected in the third quarter, as the steel markets are usually affected by the summer doldrums at that time and inventories may be replenished by then. For now, customers are still saying "yes" to the price increases, and there is still room for prices to rise further.
However, the one "crack in the facade" may be the good availability from domestic mills, despite the high prices. Sources say that they are surprised how easy it is to get flat rolled, if they are willing to shell out the prices mills are asking for. Traders tell SteelOrbis that it is possible to get material on a very short notice if you pay a pretty penny to get it, and that they are buying more domestic material than ever before.
There are virtually no import HRC offers at the current time, and while China offers CRC to the US from time to time, there are currently no workable offers as their previously offered numbers have been withdrawn, and it is expected that they will return to the market with much higher prices. Meanwhile, exports from the US continue, facilitated by the weak dollar and strong flat rolled markets in other regions. The Mexican market in particular is currently very strong, and domestic mills are shipping flat rolled there at a premium to domestic prices.
The most recent steel export data available from the US Import Administration show that the US exported a total of 106,180 mt of HRC in January 2008, compared to only 48,667 mt in January 2007. In January '08, the US exported the most tons of HRC to: Canada, at 45,361 mt; Italy, at 21,690 mt; Mexico, at 18,985 mt; Belgium, at 8,300 mt; and Spain, at 4,809 mt.
CRC exports in January 2008 have remained relatively stable year on year, reaching 43,018 mt, compared to 37,226 mt in January 2007. The top recipients of US CRC in January '08 were: Canada, at 23,768 mt; Mexico, at 15,842 mt; Brazil, with 742.6 mt; Vietnam, with 707.6 mt; and South Korea, at 523.6 mt.