On May 1, US domestic flat rolled steel producers announced a sweeping round of price increases, with AMUSA setting a new minimum HRC base price of $25 cwt. ($551/mt or $500/nt). Although the increase has been slow to gain acceptance, due to still-recovering demand from the manufacturing sector, prices have firmed from $23.00-$25.00 cwt. ($507-$551/mt or $460-$500/nt), two weeks ago, to an average of $24-$25 cwt. ($529-$551/mt or $480-$500/nt), ex-mill.
Yet despite the slow acceptance of the May 1 price increase, that didn’t stop domestic flat rolled steel from rolling out a second increase announcement late last week. And while most domestic producers announced a $2.00 cwt. ($44/mt or $40/nt) increases, effective with all new orders, AMUSA set a new HRC minimum base price of $27 cwt. ($595/mt or $740/nt), ex-mill.
The announcement did not come as a surprise, sources noted, as it was widely held that a second increase was imminent. For example, US automakers have finally started to resume production, and a growing number of manufacturing plants throughout the US have also started to reopen. That, coupled with a belief that domestic scrap prices are likely to settle at strong sideways during the June buy-cycle, are positive signs for the market. Others believe that current prices will crawl upward, incrementally, in the upcoming weeks, although "no one thinks mills are going force both increases into acceptance."
On the other hand, some buyers have said that despite the positive sign, that “overall demand levels stink.”
Reduced capacity utilization rates, which has helped prevent oversupply within the current finished steel market, were also likely factored into mills’ decision to push prices higher. However, it’s still unclear whether mills’ most recent increase announcement will continue to push prices higher, or whether domestic flats producers are employing the “announce two with the hopes that the second will shore up the first” strategy.
“No one thinks that capacity utilization rates are going to go back to normal any time soon,” a source said. “I think at this point, everyone is waiting to see what demand looks like in June and July, and whether any new coronavirus hot spots flare up, and whether that will lead to renewed stay-at-home orders.”