US flats market appears far from bottom as prices continue to drop

US domestic flat rolled spot prices have declined for the third consecutive week and there remains no clear end in sight to the price softening. Since last week, both hot rolled coil (HRC) and cold rolled coil (CRC) spot prices slipped $0.50 cwt. ($11/mt or $10/nt). Even as spot prices have dropped as much as $2.00 cwt. ($44/mt or $40/nt) since the beginning of September, sources tell SteelOrbis there's nothing to stop prices from decreasing further, and HRC transactions under $30.00 cwt. ($661/mt or $600/nt) ex-Midwest mill are expected to emerge as soon as early October. Buyers have plenty of inventory at the moment and are therefore waiting on the sidelines to place an order unless they are in immediate need of material. The only factor that could turn the market around in the short term would be a surge in scrap prices for October. And while next month's scrap trend is still cloudy, a major increase remains an extremely unlikely scenario.

Mexico is carefully following the US domestic price trend and is expected to continue making deals to remain aggressive as US prices weaken. Mexican HRC in the range of $29.00-$30.00 cwt. ($639-$661/mt or $580-$600/nt) DDP loaded truck delivered into Houston has been low enough to attract a good amount of activity, according to traders, but buyers who can hold off on placing an order are doing so and sticking largely to material out of US mills given extremely short (one to three week) lead times. Chinese CRC meanwhile, is unchanged for the second consecutive week; but due to recent increases in iron ore prices, some Chinese mills have been pushing for a slight increase in new offers. However, traders don't expect the increases to stick and advised that anyone seriously interested in placing an order can easily book at pre-increase levels.

*DDP loaded truck in US Gulf ports
**DDP loaded truck delivered into Houston