Domestic flat rolled mills like Mittal and
US Steel have been planning to cut
production in the fourth quarter in order to hang on to third quarter prices. However, it may already be too late, as both hot and cold rolled coil prices have slipped $20 /nt ($22 /mt or $1.00 cwt.) during the past two weeks.
Many had predicted that domestic flat rolled producers would be able to maintain third quarter pricing for the rest of the year by curbing output. Nevertheless, excessive inventories, the $40 / long ton dip in busheling
scrap prices, and falling natural gas prices are all factors increasing the amount of pressure on producers to lower their prices.
Hot rolled prices from domestic mills now range from $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB mill, though large volume buyers are able to get deals that are considerably under $30.00 cwt. FOB mill. Domestic cold rolled offers are down to $34.50 cwt. to $35.50 cwt. ($761 /mt to $783 /mt or $690 /nt to $710 /nt) FOB mill. The pricing trend is still slightly down.
Import prices, on the other hand, have stayed stable since our last report two weeks ago, with hot rolled coils still ranging from $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt) FOB loaded truck, US Gulf ports, and cold rolled from $31.00 cwt to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt) FOB loaded truck, US Gulf and West Coast ports, with most offers coming from East Asia.
Chinese flat rolled prices are thought to have bottomed out, so this will lend some strength to the cold rolled import market which has been softening for several weeks. On the other hand, Mexican offers for flat rolled products to the US have been becoming increasingly more aggressive, as their home market is very soft. Overall, the pricing trend for imported flat rolled is still slightly down.
While both the domestic and import flat rolled markets are expected to continue softening until the year-end, experts predict that we may see some strengthening in the New Year, once inventories are down to normal levels from limited domestic output and reduced import volumes. Import tonnage to the US is expected to continue softening until February.
License data from the
US Steel Import Monitor show that in the month of September 2006, the following countries exported the highest volumes of hot rolled sheet to the US:
Korea at 87,424 mt,
Canada at 57,005 mt,
Malaysia at 56,276 mt,
Australia at 36,032 mt, and
Mexico at 24,094 mt. The usual market players,
Russia and
Egypt, did not make the top five for September, though they have been major import sources for hot rolled this year on a YTD basis.
For cold rolled sheet, the major import sources in September were:
Taiwan at 47,556 mt,
China at 46,186 mt,
Canada, at 28,062 mt,
Korea at 17,335 mt, and
Brazil at 16,781 mt.