US flats lead times stabilize, but prices remain under pressure

US domestic flat rolled prices appear to be nearing an inflection point, although spot prices could fall further before any potential turnaround. While lead times at domestic mills remain short--about two weeks on hot rolled coil (HRC)--they have been lengthening slightly over the past couple weeks. Buyer inventories have been winding down over the past couple months and many have recently been booking small orders steadily, resulting in consistent, but still slow, business at many US mills. Additionally, with spot prices eating into mill profits, rumors have been swirling over the past few weeks that a price increase may soon be announced. "Everyone's on pins and needles waiting for it," explained one US buyer, but sources tell SteelOrbis that mills have been reluctant to announce an increase due to the expected scrap price drop next month, which could null the effects of an announcement.

Larger buyers already able to purchase HRC on the spot market for up to $1.00 cwt. ($22/mt or $20/nt) under the current spot range of $29.00-$30.00 cwt. ($639-$661/mt or $580-$600/nt) ex-Midwest mill have started make hedge buys ahead of the increase. Even though spot prices could still fall again in the next couple weeks, no major drops are expected. As a result, Mexican mills are able to book decent orders at $30.00-$31.00 cwt. ($661-$683/mt or $600-$620/nt) DDP loaded truck delivered into Houston. China has also garnered a few orders of cold rolled coil (CRC) at $36.50-$37.50 cwt. ($805-$827/mt or $730-$750/nt) DDP loaded truck in US Gulf ports for late September/October delivery.

**DDP loaded truck delivered into Houston