US flat rolled mills say that they are either almost or fully booked through February, and that the $30 /nt ($33 /mt or $1.50 cwt.) price increase for February shipments has been accepted in full.
Taking into account the February price increase (as well as the $30 /nt January increase), most domestic hot rolled offers now range from $28.50 cwt. to $30.50 cwt. ($628 /mt to $672 /mt or $570 /nt to $610 /nt) FOB mill, while cold rolled offers range from $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) FOB mill.
The pricing trend for domestic flat rolled is still up, since at least one more price hike for March or April shipments is expected to be announced, with mills likely citing rising raw material costs and their healthy order books as justification.
Demand, however, is not as strong as these price increases might suggest. End users in the automotive, appliance, and construction industries are still seeing very weak business, and despite the pick up in service center buying from mills, there has been no pick up in service center shipments - In late December, the Metals Service Center Institute (MSCI) reported that steel service center shipments in the US for the first 11 months of the year totaled 48.8 million tons, down seven percent from a year ago.
As one flat rolled trader told SteelOrbis last week, "These increases may just be short term; this thing could unravel as fast as it went up. The only demand we're seeing is just inventory rebuilding."
On the positive side, the lack of imports as well as domestic mills' exporting activities should help to keep inventories somewhat lean despite the absence of strong demand. There are still very few import offers out there as the international pricing level remains much higher than the amount that US buyers will pay. For the most part, the only hot rolled import offers available are from Mexican mills supplying some tonnage to the Texas market at numbers that are comparable to domestic.
As for cold rolled imports, a few Chinese offers for March shipment are starting to emerge, but they have increased by approximately $30 /nt from the previous month, and still remain at least $0.50 cwt. ($11 /mt or $10 /nt) higher than domestic numbers. Unlike the export tax for most other steel products from China, China's export tax for flat rolled products did not increase (with the exception of narrow band items).
The major domestic flat rolled mills continue to export, mostly to Canada, Mexico, Central America and South America. There are still some tons being exported to Europe, but the high ocean freight rates and difficulties in securing vessels continue, making overseas exports quite challenging. There is some speculation that despite the mills' apparent optimism about the market, they need to export to keep their order books full and to portray demand as being stronger than it actually is.
In other news, the US Department of Commerce (DOC) recently made its preliminary determination in the antidumping review for hot rolled imports from India. The DOC determined that the current antidumping duty for one Indian mill, Essar, will be reduced from 44.40 percent to zero percent, and that the duty rate for another mill, Tata, will be reduced from 38.72 percent to 0.24 percent. Theoretically, this leaves the door open for India to export more hot rolled products to the US; however, it is clear that Indian mills are much more interested in shipping the far more lucrative, value-added products to the US such as API grades of hot rolled products.