US hot and cold rolled coil prices have remained stable for the third consecutive week, and despite the ongoing weak demand, the domestic flat rolled market seems to have finally reached a floor price – at least, for now.
Most domestic HRC offers are still ranging from approximately $19.00 cwt. to $21.00 cwt ($419 /mt to $463 /mt or $380 /nt to $420 /nt) ex-mill in the Midwest, while most cold rolled coil (CRC) offers are still offered around $22.00 cwt. to $24.00 cwt. ($485 /mt to $529 /mt or $440 /nt to $480 /nt) ex-Midwest mills.
Despite the bump in May scrap prices and resulting $45 /nt ($2.25 cwt. or $50 /mt) increase in Nucor's flat rolled RMS, most spot offers have not registered an increase and it doesn't look like raw materials will provide much support for US flat rolled prices going forward as scrap prices are expected to start trending slightly down again in June. Nevertheless, the spot market has heated up somewhat in recent weeks due to the lack of import offers and reduced supplies in the market. While prices are not expected to rebound anytime soon, it seems that the tight supplies seem to have finally resulted in the bottoming out of spot prices.
US flat rolled consumption will most likely continue to remain weak this summer, especially with the cutback in US automotive production, but domestic mills are expected to gain increasing price control going into the third and fourth quarters due to the effects of the prolonged reduction in US steel output and lack of imports entering the country. Granted, mills will have to lower prices again if the scrap market takes a serious turn for the worse, although while scrap may see some slight softening as it usually does in the summer months, busheling supplies will remain somewhat tight due to the reduced vehicle production, which should prevent any major scrap price drops, at least for the higher grades of scrap consumed for flat rolled production.
Furthermore, there are also some ex-US flat rolled export deals being conducted, primarily of secondary or excess prime material to Asian destinations such as Vietnam. Exports are still a small part of the overall US flat rolled market, but with domestic demand being so weak and the dollar declining in value (in the last week of May it hit a five-month low), larger firms that are able to accommodate export inquiries are very happy to do so.
On the import side, it is still the case that very little bookings are transpiring, as the US market is not attractive to foreign mills right now, and US customers are able to get quicker and more competitive offers from domestic mills. Of the few import offers out there, Mexico continues to be the primary import source offering HRC and CRC to the US, although not in any significant volumes, since Mexican mills are mostly full through July and are not aggressively seeking US orders. There are also a few scattered offers from Latin America, but not too many tons are available and the prices are not very competitive.
The few Mexican and Venezuelan offers of HRC to the US are still available in the range of about $18.00 cwt. to $20.00 cwt. ($397 /mt to $441 /mt or $360 /nt to $400 /nt). Mexican offers are delivered to the US border crossing, while Venezuelan offers are duty-paid, FOB loaded truck in US Gulf ports.
As for CRC, Mexican offers have continued to trend sideways at approximately $23.00 cwt. to $25.00 cwt. ($507 /mt to $551 /mt or $460 /nt to $500 /nt) at the US border crossing. Some Brazilian offers are out there too, but they are even less competitive, at a range of $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt) duty-paid, FOB loaded truck in US Gulf ports. Argentina is out of the market through August.
There are also still scattered offers of CRC from China, but the offers are even less competitive the Latin American offers and have longer lead times. Chinese offers can mostly be found within the range of $25.00 cwt. to $27.00 cwt. ($551 /mt to $595 /mt or $500 /nt to $540 /nt) duty-paid, FOB loaded truck in US Gulf ports.