Most, if any, optimism about the US domestic flat rolled market has faded in recent weeks, as US flat rolled prices have now declined for the third consecutive week.
Most domestic hot rolled coil (HRC) spot prices declined about another $0.50 cwt. ($11 /mt or $10 /nt) over the past week and now range from approximately $20.00 cwt. to $22.00 cwt. ($441 /mt to $485 /mt or $400 /nt to $440 /nt) ex-mill in the Midwest.
Furthermore, most domestic cold rolled coil (CRC) spot prices decreased by approximately $0.50 cwt. ($11 /mt or $10 /nt) on the low end of the offering range over the past week, which brings the current offered range to around $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt) ex-mill in the Midwest. Despite the most recent decreases, both HRC and CRC customers may still be able to negotiate orders at prices even below this range depending on order size and specifics.
Moving forward, prices are expected to continue trending slightly down, due to the abundant amount of inventory still languishing in stockyards and service centers despite the continued cutback in production. Demand just hasn't rebounded like most distributors had expected and hoped for by now. Furthermore, industry confidence remains low, due to the fact that many flat rolled mills continue to make headlines with plant closures and idlings, such as AK Steel's announcement last week that it would idle its Rockport, Indiana finishing plant.
However, a very recent potential bright spot for the US domestic steel market in general is that after last week's busheling scrap price drop of $35 /long ton (lt), busheling scrap prices have already increased $10 /lt this week. If scrap prices continue to increase throughout the month, coupled with low utilization rates resulting from temporary shutdowns, there will be a better chance for flat rolled price stabilization in the near future.
On the import side, foreign mills, for the most part, have been relegated to the roll of following US domestic mill offers downwards. While some sources are managing to stay somewhat active with spotty bookings, others have lost their competitive edge and are no longer attractive flat rolled options in this market. Traders continue to struggle to get bookings as they must compete with aggressive US mills that are able to ship product quickly.
Nonetheless, Mexico remains the primary competitive foreign source offering HRC to the US, with Mexican mills aided by their ability to produce quick orders as well as their proximity to US customers. Mexican import offers declined by about another $1.00 cwt. ($22 /mt or $20 /nt) over the past week, to keep pace with US domestic offers, and now range from approximately $20.00 cwt. to $22.00 cwt. ($441 /mt to $485 /mt or $400 /nt to $440 /nt) delivered to the US at the border crossing, and in some cases, delivered to major cities in Texas and beyond. Most Mexican mills will remain aggressive over the coming weeks and may be willing to negotiate for certain order circumstances, especially as US domestic prices are expected to remain soft.
Furthermore, SteelOrbis has heard of HRC import offers from Turkey and Argentina to the US for as low as $21.00 cwt. ($463 /mt or $420 /nt) duty-paid, FOB loaded truck in US Gulf ports; however, these offers have yet to be confirmed.
On the CRC side, Brazil is currently one of the most active and competitive sources importing to the US. Mills in Brazil, along with those in India, China and Mexico, have not yet officially lowered their price range to the US over the past week, and most offers from these sources remain at around $25.00 cwt. to $27.00 cwt. ($551 /mt to $595 /mt or $50 /nt to $540 /nt); however, serious buyers that want to book large tonnage orders should be able to negotiate significant discounts. The above listed Brazilian, Indian and Chinese offers are duty-paid, FOB loaded truck in US Gulf ports, while Mexican offers are delivered to the US at the border crossing.
Further illustrating Brazil's emergence as a CRC import force, according to licensing data from the US Steel Import Monitoring and Analysis System (SIMA) Brazilian CRC imports to the US totaled 16,364 mt in March, but have already totaled 10,655 mt over just the first two weeks of April.