US flats pricing maintains hold, despite “stair step” pattern of decline

The sideways movement will likely be temporary, with expectations by countless players within the industry that HRC could potentially tick down another $1.00 cwt. or even $2.00 cwt. ($22/mt to $44/mt or $20/nt to $40/nt) before the middle of August. 

However, while some continue to be concerned about pricing declines, others see this as a more rounded, wave-shaped movement, with ebbs and flows of activity to take place throughout the rest of 2010.  "It may continue to dip but then you'll see a rebound and things will stop sliding," commented one trader. "And then we'll increase again until November or December, and then we'll see it drop again before it starts to flow back up in the first quarter of 2011."  Which, if historical data is any indicator, will likely be the case; however, overproduction continues to be a challenge, and the height, force, and length of any sort of pricing wave will still be dependent on mills realizing more accurate supply and demand models, and shifting capacity gears down a notch or two.

Looking south of the border, Mexican HRC has trended neutral since our last report a week ago, although CRC has dipped approximately $1.00 cwt. ($22/mt or $20/nt), bringing it on par with ranges seen domestically.

In terms of overseas imports, Russian offerings of HRC have trended downward slightly ($0.50 cwt, $11/mt or $10/nt) since our last report, which now has them in a similar spot-offer span as US and Mexican transaction prices for this product.  Chinese pricing, although not declining as anticipated, has narrowed by approximately $1.00 cwt. on the high end, with a $1.00 cwt. as opposed to a $2.00 cwt. spread now being reported offer ranges.  Lastly, Indian offers have trended sideways, although revised pricing for September is soon anticipated.