US domestic flat rolled market prices have remained the same over the past week after registering declines in the previous few weeks. It appears that the mills are still responding to the lack of demand with further cuts and, as a result, prices may be starting to stabilize.
Disappointingly, January and February brought another wave of price decreases. But with more steelmaking capacity taken out of the market, business has been fairly stable, alas extremely slow, for mills, service centers, end-users and traders. One trader told SteelOrbis, "Business has not been increasing, but more importantly, business has not been decreasing." This does not necessarily mean that prices will stop decreasing and demand will pick up, but it is a sign that the market is demonstrating some signs of activity, and this activity could also provide a boost to the overall confidence of the market moving forward.
Domestic hot rolled coil (HRC) spot prices continue to be in the range of approximately $22.00 cwt. to $24.00 cwt. ($485 /mt to $529 /mt or $440 /nt to $480 /nt) ex-mill in the Midwest.
Most domestic cold rolled coil (CRC) spot prices also trended sideways over the past week, and continue to be a offered for around $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) ex-mill in the Midwest. For both product lines, if there are sizable orders, prices can certainly be negotiated below the above ranges.
Moving forward, the $5 billion bailout program to help US auto parts makers, announced late last week by the US Treasury Department, could provide some much needed aid in demand for steel use in the US auto industry. In the meantime, the current state of the US steel market has remained unstable, and the recent idling of AK Steel's Middleton, Ohio blast furnace, and the possibility of US Steel idling its Alabama mill, could both further reduce overall steel supply. But the overall lack of demand will not change dramatically in the short run and therefore the pricing trend remains slightly down.
Traders, too, are struggling with the new realities of the US markets. Competing against domestic lead times alone is difficult in this turbulent global economy, but now that US domestic mills are assertively import price matching just about every potential deal, US buyers will most likely see more benefit in purchasing domestically than overseas.
Nevertheless, import offers trickle in. Mexican and Venezuelan offers to the US continue to be the most aggressive and competitive, and have remained in a similar range over the past week; at approximately $22.00 cwt. to $24.00 cwt. ($485 /mt to $529 /mt or $440 /nt to $480 /nt). Mexican offers are delivered to the US at the border crossing, and in some cases, delivered to major cities in Texas and beyond, while Venezuelan offerings are duty-paid, FOB loaded truck in major US Gulf ports.
Turkish mills are also offering HRC to the US in the same general range as a week ago, at $22.00 cwt. to $23.00 cwt. ($485 /mt to $507 /mt or $440 /nt to $460 /nt) duty-paid, FOB loaded truck in US Gulf ports; however, along with not having enough of a pricing advantage, long lead times and the lack of available vessels continue to prevent most Turkish offers from being booked.
On the CRC side, India has emerged in recent weeks as the most aggressive foreign source offering to the US. Indian mills have generated a few extra orders over the past week, even though its offers remain in the same range as Mexico, Brazil, Argentina and Turkey, at about $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt). Indian, South American and Turkish offers are duty-paid, FOB loaded truck in US Gulf ports, while Mexican offers are delivered to the US at the border crossing.
Overall demand for flat rolled products remain weak, as service center inventories for flat rolled products continued decreasing for the sixth consecutive month in February, from about 4.53 million nt in January to about 4.45 million nt, according to the most recent Metal Service Center Institute (MSCI) shipment and inventory report; however, daily shipments also decreased in February to 70,000 nt from about 72,000 nt in January. So, despite lower inventories, the amount of inventory on-hand at service center warehouses actually increased from 3.0 months in January to about 3.2 months in February.