October order books are still not open at most US flat rolled mills as pricing decisions are still being made, but a significant decrease is expected for new orders.
The US flat rolled market in general has been trending down and, although maybe too little too late, mills are now cutting production. For hot dip galvanized (HDG) coil, demand is weak and is expected to remain that way at least through the end of this year. In line with the weak demand and falling busheling scrap numbers, HDG prices are expected to continue to decline, at least moderately, through the end of this year. Some buyers suspect, though, that there may be a light at the end of the tunnel come January.
Current spot base prices for HDG coils are approximately $53.00 cwt. to $55.00 cwt. ($1,168 /mt to $1,213 /mt or $1,060 /nt to $1,100 /nt). Domestic HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) coils are now ranging from $62.00 cwt. to $64.00 cwt. ($1,367 /mt to $1,411 /mt or $1,240 /nt to $1,280 /nt) ex-mill Midwest; for firm bids and big orders, these numbers are gladly negotiated downwards.
At this point, especially for HDG, as it is the weakest of the flat rolled products, mills are ready and willing to make deals with customers. Mills are obviously hesitant to float low numbers but willing to entertain firm buying proposals. Real or not, there are rumors of a wide range of deals in the market that are below the above levels.
Though prices have been on a downward slide for the last couple of months, it is thought that the market will eventually level off. "There were so many price increases of such large magnitude, this had to happen eventually," one large buyer commented to SteelOrbis. And now that prices are softening, it is expected that mills will try to force a rebound come the beginning of 2009. Buyers are expecting an increase come January, after a few more months of market softening.
Imports are sharing the same fate as the domestic numbers. Prices on the import side have been on a decline as well, as offshore mills are looking for the bottom and know they have to go lower than the domestic number if they want to get any tonnage booked. Lately, import offers have been looking a lot more attractive, although prices still aren't low enough in buyers' eyes. With domestic steel prices trending down, it's quite risky to purchase for future deliveries right now, especially for a product that is not currently in very high demand. The main culprit for the low demand for coated products hasn't changed: the sluggish housing and residential construction sectors are not expected to rebound until well into 2009.
Offers from China for HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) are ranging from $61.00 cwt. to $63.00 cwt. ($1,245 /mt to $1,389 /mt or $1,220 /nt to $1,260 /nt) FOB loaded truck West Coast ports.
Chinese offerings for HDG sized 0.028" x 48" G40 (0.71 mm x 1.219 m) range from $53.00 cwt. to $55.00 cwt. ($1,168 /mt to $1,213 /mt or $1,060 /nt to $1,100 /nt) FOB loaded truck West Coast ports.
Offers from India for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) have decreased by $2.00 cwt. ($44 /mt or $40 /nt) since our last report. Offerings are now in the range of $60.00 cwt. to $62.00 cwt. ($1,323 /mt to $1,367 /mt or $1,200 /nt to $1,240 /nt) FOB loaded truck Gulf ports.
For the same size and coating, Chinese offerings are also priced at $60.00 cwt. to $62.00 cwt. ($1,323 /mt to $1,367 /mt or $1,200 /nt to $1,240 /nt) FOB loaded truck West Coast ports.
Mexican offers for the same size and coating are also available. Offers from Mexico at the border crossing are ranging from $60.00 cwt. to $62.00 cwt. ($1,323 /mt to $1,367 /mt or $1,200 /nt to $1,240 /nt) as well, though for quick October deliveries. All other offers mentioned above are for December/January deliveries.
Comparatively, domestic prices for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) vary from mill to mill, but can be found at a range of $63.00 cwt. to $68.00 cwt. ($1,389 /mt to $1,499 /mt or $1,260 /nt to $1,360 /nt) ex-mill Midwest.
On the galvalume side of the market, prices are also trending down. For 0.019" by 48" AZ55 (0.48 mm x 1.219 m) items, domestics have fallen by about $1.00 cwt. ($22 /mt or $20 /nt) and are now ranging from $64.00 cwt. to $66.00 cwt. ($1,411 /mt to $1,455 /mt or $1,280 /nt to $1,320 /nt) FOB mill. As for imports, the offers that are available are right around the domestic number, though for much later arrivals.
Generally speaking, the pre-painted market has seen price decreases as well. At first, mills attempted to wait out the price deterioration of other flat rolled products, as pre-painted products are niche products, so there was a chance that they would not have to take as big of a hit. The mills were eventually forced to lower their prices and, in general, pre-painted product prices are down approximately $2.50 cwt. to $5.00 cwt. ($55 /mt to $110 /mt or $50 /nt to $100 /nt) from their peak for both domestic and import levels. The actual price depends on the product extras.