US flat rolled prices have declined for the second consecutive week, as scrap prices appear to be softening further and weak demand levels continue to have a stronger effect on pricing than inventory levels.
With busheling scrap prices expected to decrease about another $20 /lt in April, most domestic hot rolled coil (HRC) spot prices declined by about $1.00 cwt. ($22 /mt or $20 /nt) from last week, and are now ranging from about $20.50 cwt. to $22.50 cwt. ($452 /mt to $496 /mt or $410 /nt to $450 /nt) ex-mill in the Midwest. Most domestic minimills continue to compete with one another for every booking possible, therefore providing customers a slight advantage in negotiating for sizable orders.
Most domestic cold rolled coil (CRC) spot prices also decreased by approximately $1.00 cwt. ($22 /mt or $20 /nt) over the past week, bringing the current offered range to around $24.50 cwt. to $26.00 cwt. ($540 /mt to $573 /mt or $490 /nt to $520 /nt) ex-mill in the Midwest. CRC customers may also be able to receive discounts depending on order time-frame and tonnage, especially considering that the domestic price trend is expected to remain soft and trend slightly down in the coming weeks.
Nonetheless, there has been some spotty buying activity here and there recently, mostly from the few suppliers who were able to deplete most of their inventory, though overall activity remains depressed. Despite suppliers' best efforts to keep inventory levels down, according to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, weak demand levels still attributed to an estimated 3.2 months of inventory overhang in service center warehouses during February.
However, most flat rolled traders would trade places with domestic distributors right now, as import buying activity is almost non-existent with the exception of some niche-sized items. Most importing sources are just trying to keep pace with US domestic prices, though they are unable to match the quick domestic lead times, which pretty much takes imports out of the game.
Mexico remains the only slightly competitive foreign source offering HRC to the US, aided by their proximity to US customers. Mexican mills have been attempting to keep pace with US mill price decreases, by reducing their offers by roughly $0.50 cwt. ($11 /mt or $10 /nt) over the past week, and currently range from about $21.00 cwt. to $22.50 cwt. ($463 /mt to $496 /mt or $420 /nt to $450 /nt) delivered to the US at the border crossing, and in some cases, delivered to major cities in Texas and beyond. However, Mexican mills will most likely be willing to reduce prices to under $21.00 cwt. ($463 /mt or $420 /nt) on orders of significant tonnage, especially if they are competing with domestic US mills.
Meanwhile, the other primary HRC importers to the US, Venezuela and Turkey, continue to take a back seat to the bidding war between Mexican and US mills.
On the CRC side, import offers from the most competitive foreign sources -- India, Mexico and Brazil - are attracting little attention from traders, as US domestic mills will trump most offers. With that being said, offerings trended down by about $1.00 cwt. ($22 /mt or $20 /nt) from last week's range to a level of around $25.00 cwt. to $27.00 cwt. ($551 /mt to $595 /mt or $50 /nt to $540 /nt) and keep pace with US domestic mills. If there are CRC import bookings, Mexican and Brazilian mills will be a little more aggressive than Indian mills, offering at the bottom of the range. The above listed Brazilian and Indian offers are duty-paid, FOB loaded truck in US Gulf ports, while Mexican offers are delivered to the US at the border crossing.