Four major US flats mills have issued price increase announcements in the last two weeks, attempting to stem softening spot prices.
Last week, Severstal North America issued a letter indicating that current base prices for hot rolled coil (HRC) and cold rolled coil (CRC) would be $42.00 cwt. ($926/mt or $840/nt) and $47.00 cwt. ($1,036/mt or $940/nt), respectively, beginning May 23. AK Steel then announced Monday that it is raising HRC and CRC spot market base prices $2.50 cwt. ($55/mt or $50/nt) effective immediately. By Thursday, Duferco Farrell, NLMK Indiana and Sharon Coating sent out a letter to customers informing them that prices on all non-contract orders effective with shipments July 1 would increase $2.00 cwt. ($44/mt or $40/nt). Nucor Corporation made a similar move Thursday as well, raising flat-rolled prices $2.00 cwt. across the board.
The announcements have been shrugged off by domestic flats buyers as just an attempt to prevent US domestic spot prices from declining further, and there is widespread doubt that any of the announced increases will actually bump up spot prices. After a month of slow order activity, however, it appears the pricing announcements have given a much needed boost to mill order entry rates. One Southeast distributor told SteelOrbis that the announcements "got the hesitant buyer to commit."
But while more buyers have been placing orders in the last two weeks than they have been since early Q2, they're doing so in the range of $37.00-$38.00 cwt. ($816-$838/mt or $740-$860/nt) ex-Midwest mill for HRC and $43.00-$45.00 cwt. ($948-$992/mt or $860-$900/nt) ex-Midwest mill for CRC. HRC spot prices have dropped $2.00 cwt. ($44/mt or $40/nt) on the high end and $1.00 cwt. ($22/mt or $20/nt) on the low end since last week. CRC spot prices have slipped $1.00 cwt. in the past week. If order entry rates continue to rise in the next couple weeks, mill lead times will extend from their current levels of two to three weeks on HRC and four to five weeks on CRC. Although spot prices are unlikely to trend back up, it could prevent further price erosion in the domestic market.
Regardless of higher order activity domestically in the US, with the exception of Mexico, interest in imports isn't expected to pick up until at least Q3. Mexican mills are offering HRC to the US in the range of $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) FOB loaded truck delivered into Houston-down $2.00 cwt. on the high end since last week. Mexican CRC offer prices are unchanged, and still range from $43.00-$44.00 cwt. ($948-$970/mt or $860-$880/nt) FOB loaded truck delivered into Houston. Orders of Mexican HRC have been especially steady in the last couple months as offer prices continue to be just below US domestic spot price ranges with lead times similar to US domestic mills.
Offshore activity is still quiet. There is little interest in Russian HRC offers in the $36.00-$38.00 cwt. ($794-$838/mt or $720-$760/nt) DDP loaded truck in US Gulf ports range, although offer prices have dropped $1.00 cwt. on the low end since last week. Turkish HRC offers to the US are similar, but interest is light at best. The same is true for Chinese CRC offers which have not moved since last week and still range from $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) DDP loaded truck in US Gulf ports.