US domestic flats mills this week announced their second $2.00 cwt. ($44/mt or $40/nt) price increase in less than a month. SteelOrbis previously reported that while the first increase failed to gain acceptance, it did remove some of the “deep deals and discounts” that had been previously available to volume buyers.
Sources say it is not yet clear whether the second increase will gain acceptance, or whether mills’ strategy of “announce two in hopes the first will stick” will work, although current market fundamentals point to higher prices.
Perhaps most notably, traders say, is that current offshore pricing is at a near identical price point to domestic pricing, which is making it difficult to sell import HRC to buyers. Buyers’ reluctance to book offshore will surely help push lead times out, along with helping to skew the market in favor of domestic mills in the next 90-120 days, when import arrival tonnages fall.
“Sentiment is that we’ve reached the bottom, and that customers are finally getting off the bench and back into the market,” a source said.
On the other hand, in the absence of scrap prices going up in March as currently predicted, pushing the full price increase into acceptance is “going to be a hard sell,” a source said. At current, our forecast puts US HRC prices in an upward momentum.
Although it’s widely held that mills will be unsuccessful in pushing both price increases through, it’s suspected that prices could move up $1.00-$1.50 cwt. ($22-$33/mt or $20-$30/nt) in the next 30 days.
For now, however, US HRC prices remain in the range of $34-$35 cwt. ($750-$772/mt or $680-$700/nt), ex-mill, although it’s largely speculated that pricing will revise upward in the next seven days.
Domestic HRC producers continue to push for acceptance of the recent $2.00 cwt. ($44/mt or $40/nt) price increase, other sources said, although that desire is being met by widespread resistance in the marketplace.