While some US flat rolled mills have already announced price increases for September deliveries, it seems others are holding back, at least for another few days.
As of Tuesday, AK Steel has announced to customers that it will be increasing its prices for flat rolled products by $50 /nt ($2.50 cwt. or $55 /mt) for September deliveries, citing increased demand for its products as well as the need to recover steelmaking inputs as the reasons for the price hike. However, buyers have pointed out that even before this September price hike, AK was on the high end of the price spread for its hot rolled coils (HRC), and was having some difficulty getting customers to pay the full price. According to market sources, deals can be made and HRC can be found in the vicinity of $53.00 cwt. ($1,168 /mt or $1,060 /nt) or possibly at slightly lower numbers from other mills -- so why the bullish increase from AK? This most recent hike from AK Steel will put its HRC prices at $58.75 cwt. ($1,295 /mt or $1,175 /nt).
Another mill has also, not officially but verbally, made an increase attempt in the last week. US Steel has said that it will increase its flat rolled product pricing by $40 /nt ($2.00 cwt. or $44 /mt) for September shipments. At press time, the industry is awaiting an official announcement from ArcelorMittal, though verbal rumors have suggested the mill is also coming out with a $40 /nt increase, and from Nucor Sheet Mill Group. Nucor's flat rolled products are at the higher end of the price spectrum as well, due to the $30 /nt ($1.50 cwt. or $33 /mt) increase the company implemented in August, though it is expected that in order to make up for the rising raw material costs, Nucor will follow its competitors and raise prices another notch. As Nucor is a mill that relies heavily on scrap for its steel production, it may find itself in a tough spot; scrap prices are significantly up, yet HRC demand is just okay. In fact, mills are said to still have stock available at August pricing levels.
Most US spot prices for domestic HRC are now, realistically, at approximately $53.00 cwt. to $56.25 cwt. ($1,168 /mt to $1,240 /mt or $1,060 /nt to $1,125 /nt) ex-mill Midwest. West Coast prices are approximately $3.00 cwt. ($66 /mt or $60 /nt) higher.
On the cold rolled coil (CRC) side, spot prices are now ranging from $58.00 cwt. to $60.00 cwt. ($1,279 /mt to $1,323 /mt or $1,160 /nt to $1,200 /nt) ex-mill Midwest.
As SteelOrbis mentioned briefly before, contract prices for CRC are still below spot prices (despite Nucor's recent contract price increase) and some customers that buy on a contract basis are reselling the material for more than what they paid contract, but less than the going spot price. This less expensive material is finding its way into the market, which may lead to an interesting market dynamic in the months to follow.
In general, the flat rolled market has weakened in the last few months, although it is difficult to say if end-use demand is actually weakening or if we are just experiencing the usual summer doldrums. Buyers as well as the domestic mills are hoping that things will pick up when autumn arrives, which may explain the September price increase announcements.
On the import side, HRC import offers are virtually nonexistent; however, the usual Chinese CRC offers are still surfacing. Chinese mills were originally hoping to implement an increase, but have now decreased their offering price to the US by approximately $1.50 cwt. ($33 /mt or $30 /nt), in order to compete with domestic numbers.
CRC offers from China are now in the range of $57.50 cwt. to $59.50 cwt. ($1,268 /mt to $1,312 /mt or $1,150 /nt to $1,190 /nt) FOB loaded truck West Coast ports.