Despite the neutral trend being seen for hot rolled coils (HRC) and the ever-present rumblings that both busheling and shredded scrap will likely go down about $20/lt next month, a number of US domestic tubing mills have rolled out a $1.50 cwt. ($33/mt or $30/nt) increase on HSS, effective immediately, citing increased cost of production.
The increase, however, didn’t exactly come as a surprise, especially since there had been quite a bit of ongoing chatter that an announcement had been looming. But to the same token, end-use order activity isn’t quite where sales people would like to see it, and it’s no great secret that the flat rolled mills’ most recent $40/nt price increase announcement didn’t gain any sort of acceptance.
“Everyone I’ve talked have said they’re wondering how everything is going up when no one is buying anything,” commented a Midwest purchasing manager. “And we all know coil prices haven’t moved, so I’m trying to figure out where this supposed ‘increased cost of production’ is coming from”.
West Coast mills, however, have yet to put anything to paper, although it’s expected they will follow suit within the next several weeks.
“It usually takes the West Coast guys a bit of time to catch up,” said one buyer. “But I don’t know if they think we’re stupid or what. What they’re saying and what the market is doing are two very different things.”
Other buyers, though, are hopeful that prices will begin another upswing, largely due to stronger inventory positions they took earlier in the third quarter. Higher prices mean higher margins, which is good news for people who bought in late July, when ex-Midwest HSS was being transacted at about $41.50 cwt. to $42.50 cwt. ($915/ mt to $937/mt or $830/nt to $850/nt), and ex-West Coast HSS was seen at $46.00 cwt. to $47.00 cwt. ($1,014/mt to or $1,036 or $920/nt to $940/nt).
For now, HSS spot offers have remained neutral from our last report two weeks ago, at approximately $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) ex-Midwest, and $48.00-$49.00 cwt. ($1,058-$1,080/mt or $960-$980/nt), ex-West Coast. But buyers throughout the US are watching and waiting, curious to see if there will be any steam behind the latest increase, and wondering if, when, and by how much spot transaction prices will be impacted.
Looking to imports, offers have once again become scarce, because, as one buyer put it, no one wants steel for the holidays. Imports which are currently arriving into Ports are also light, with the most recent data from the US Department of Commerce Import Administration indicating that import tonnages of HSS are currently at 19,741/mt (license data), which will denote a marked decrease from the 30,506/mt seen in August. At current, the most significant offshore importer of HSS is China, at 4,450/mt.