The US flat rolled market has been steamrolling, at least on the pricing side, since the beginning of June. And while there had been some speculation that sub-par demand levels would ultimately take the legs out of the market by the fourth quarter, mills have now begun announcing fourth quarter price increases.
Nucor, the minimill which normally sets the US flat rolled pricing standard, has yet to release October pricing; however, it is expected to increase transaction prices for HRC and CRC by at least $1.00 cwt. ($22 /mt or $20 /nt) following the October increases of fellow flats mills, US Steel and AK Steel, of $2.00 cwt. ($44 /mt or $40 /nt).
While domestic hot rolled coil (HRC) spot offers are still hanging around the general range of $23.00 cwt. to $25.00 cwt. ($507 /mt to $551 /mt or $460 /nt to $500 /nt) ex-mill in the Midwest, the $23.00 cwt. ($507 /mt or $460 /nt) offers are becoming far less frequent. Most spot offers are currently near the $25.00 cwt. ($551 /mt or $500 /nt) level and will most likely climb higher, by at least another $1.00 cwt. to $2.00 cwt. ($22 /mt to $44 /mt or $20 /nt to $40 /nt) in the coming weeks, for October orders.
Meanwhile, US cold rolled coil (CRC) spot prices still range from approximately $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt) ex-mill in the Midwest, but most offers $30.00 cwt ($662 /mt or $600 /nt) or higher, CRC is also expected to begin climbing again in the near future. CRC demand and activity remains far stronger than that for HRC.
One thing that's becoming evident is that the US flat rolled market has moved from a buyer's to a seller's market. The flat rolled market appears to be the first US market to have turned the corner in the mills' favor in 2009. Despite the poor demand, buyers have been forced to pretty much pay for what mills ask for. As long as scrap continues rising and the automotive sector improves, flats prices will continue climbing regardless of demand levels, at least over the next few months.
As for imports, traders continue to see little activity, and nothing really of significant tonnage. There's a little activity in the galvanized and galvalume markets but the HRC and CRC import markets are pretty desolate. Most foreign sources have been enduring rising costs in their respective markets and are expected to also raise prices but at least $1.50 cwt. ($33 /mt or $30 /nt) on October offers. Many import sources have exited from the US market entirely and are just waiting for US domestic prices to rise to their level, which will most likely not happen until 2010.
China and India are the only main sources still offering CRC to the US at present, and their offers are not competitive compared to the domestic prices. China has increased their CRC offers for the US by about $1.00 cwt. ($22 /mt or $20 /nt) since our last report two weeks ago and offers can now be found for approximately $33.00 cwt to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Meanwhile India's CRC offers are still ranging from approximately $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) duty-paid, FOB loaded truck in Gulf ports.
Furthermore, license data from the US Department of Commerce demonstrate that HRC exports to the US were well under 100,000 mt for the second consecutive month after being over 200,000 mt just last October. July's 73,288 mt of HRC imports also marked the fifth consecutive monthly decrease. Canada remained the top exporter of HRC to the US in July, at 40,858 mt, with Mexico and the Netherlands exporting 9,094 mt and 8,042 mt respectively.
Meanwhile, CRC imports also decreased for the fifth consecutive month, dropping from 44,757 mt in June to 38,364 mt in July. However, a modest increase of CRC tonnage to the US was recorded from Japan, which exported 3,105 mt in June and 8,488 mt in July.