Following last week's ambitious price hike announcements made by most US flat rolled mills, there was immediate uncertainty whether the increases would stick; however, as this past week progressed, it was becoming apparent that mills are holding firm with their offers.
Spot prices for most domestic hot rolled coil (HRC) prices were at about $19.00 cwt. to $21.00 cwt ($419 /mt to $463 /mt or $380 /nt to $420 /nt) ex-mill in the Midwest during the first week of June; however, prices have begun firming up since domestic mills announced increases of at least $30 /nt ($1.50 cwt. or $33 /mt) for July shipments. ArcelorMittal was a bit bolder in their pricing announcement, establishing a base price of $20.50 cwt. ($452 /mt or $410 /nt) on HRC offers with July shipments. Now it appears that the base will hold up and may increase further in the near future.
Similarly, most cold rolled coil (CRC) spot prices have also begun to climb since their previous range of $22.00 cwt. to $24.00 cwt. ($485 /mt to $529 /mt or $440 /nt to $480 /nt) ex-Midwest mills, the first week of June. Steel Dynamics Inc. (SDI) established a base price of $24.00 cwt. ($529 /mt or $480 /nt), while ArcelorMittal announced a base of $24.50 cwt. ($540 /mt or $490 /nt). While established customers may still be able to negotiate here and there on large orders since demand is still weak, the market is trending slightly upward and negotiations are no longer as easy to come by.
Furthermore, buyers have informed SteelOrbis that they expect domestic mills to announce another price increase within the next week or two, just to make sure that the last increase sticks, if not also to see if they can raise the bar a little further.
Nonetheless, despite any good prospective signs, steel industry professionals know that nothing will be stable nor worth cheering for until demand improves. While service center inventory overhang has decreased in recent months, from 3.2 months in February, to 2.8 months in March to 2.5 months in April, daily and monthly shipments have also consistently decreased, month-over-month, since the beginning of the year.
On the import side, most foreign sources offering flat products to the US are firming up their offers as well, perhaps even more so than their US counterparts, and are close to pricing themselves out of the market. Imports have struggled to remain competitive in this volatile market and will definitely not be able to compete with aggressive US mills if their margins are too high. While it remains to be seen whether the domestic mills will be able to keep sustaining price increases moving forward, import offers seem to be losing more and more buyer interest every week.
Mexico, which has been the leading import source, aside from Canada, of both HRC and CRC to the US this year, is currently absent from the market, as their books are full at least through July.
Meanwhile, Venezuela, while not out of the market yet, has been very slow to respond to HRC inquiries, suggesting they are mulling a significant price increase of their own.
On the CRC side, China has apparently firmed up their offers by about $2.00 cwt. ($44 /mt or $40 /nt) over the past week, and now range from approximately $27.00 cwt. to $29.00 cwt. ($595 /mt or $540 /nt) duty-paid, FOB loaded truck in US Gulf ports. Brazilian offers have also increased by about $2.00 cwt. ($44 /mt or $40 /nt) since the US domestic increases were announced and can be found in the general range of about $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) duty-paid, FOB loaded truck in US Gulf ports. And while Korean import CRC offers to the US are becoming active again in the market, they are currently way off the pace with their foreign competition, offering to the US at approximately $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) duty-paid, FOB loaded truck in West Coast ports.