While cold rolled coil (CRC) and coated coil prices continue to remain firm due to limited availability, hot rolled coil (HRC) spot prices are beginning to trend down.
Despite US mills' best efforts to keep the flat rolled price momentum going into the fourth quarter, including most mills in recent weeks announcing price hikes on November/December transactions, the domestic HRC market has demonstrate more softness over the past week. While the majority of HRC spot prices continue to range from $27.00 cwt. to $29.00 cwt. ($595 /mt to $639 /mt or $540 /nt to $580 /nt) ex-Midwest mills, more and more customers with any type of relatively significant tonnage may be able to negotiate offers down to around $26.00 cwt. ($573 /mt or $520 /nt) ex-Midwest.
Although it is the base flat rolled coil product, the HRC market is weakening again due primarily to the ongoing lack of demand in the pipe, tubing and plate markets. US flat rolled mills are actually still offering HRC for October orders and have found themselves in a precarious situation, as HRC weakness continues, while the CRC and coated products remain relatively strong due to the strength of automotive demand and continued inventory re-stocking on the service center level. But with HRC remaining weak, some speculate that the current prices for HRC are sustainable. Nevertheless, mills know that cutting prices is not likely to increase demand, so domestic mills will most likely try to keep transaction prices neutral through year-end; however, further discounts for large tonnage customers are expected.
Meanwhile, most domestic CRC spot offers remained unchanged from last week at approximately $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) ex-Midwest mills. Regardless of the continued firmness in CRC pricing, it is effectively "piggy-backing" on the tight galvanized market and is not necessarily indicative of strong CRC end-use demand.
On the import side, while more flat rolled offers from foreign sources have entered the market in recent weeks, traders inform SteelOrbis that there is no real intent to buy, especially as there is a little anxiety forming over the near-future of the domestic US market. Furthermore, despite the weakening in China's flat rolled market in recent weeks, import flat rolled offers are not particularly competitive compared to domestic offers.
There are very few offers of import HRC, but Mexico is offering some limited tonnage at a range of $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) delivered to the border crossing, which is down by about $1.00 cwt. ($22/mt or $20/nt) from last week. The most prevalent offshore import HRC source continues to be Russia, with offers remaining at about $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Meanwhile, most CRC offshore offers have remained neutral from last week, with Brazilian offers at around $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) duty-paid, FOB loaded truck in US Gulf ports, and Chinese and Indian offers mostly at around $35.00 cwt. ($772 /mt or $700 /nt) duty-paid, FOB loaded truck in US Gulf ports, or higher. However, Mexican CRC import offers also decreased by about $1.00 cwt. ($22 /mt or $20 /nt) from last week and may currently be found in the range of $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) delivered to the border crossing. As with HRC, only limited tonnage is available from Mexico. However, Mexico is expected to re-enter the US flat rolled import market in a bigger way, come October and November, which could potentially cause some further softening to the market. Also, China remains pretty inactive for the time being but traders expect these prices may start to soften soon in conjunction with import HDG offers from China and the weakened Chinese domestic flat rolled market. Still, imports aren't expected to be a major factor for the US flat rolled market overall for at least the duration of the year.
Preliminary census data from the US Department of Commerce demonstrate that HRC exports to the US actually increased for the second consecutive month in August, to 119,930 mt, from 82,954 mt in July. This was driven largely by imported tonnage from Canada, at 52,316 mt and Korea, at 27,662 mt. The next three largest HRC exporters to the US in August were Australia, at 13,692 mt; Netherlands, at 11,846 mt; and Mexico, at 11,635 mt.
Regarding CRC exports to the US, preliminary census data indicates August tonnage increased from 40,923 mt in July to 58,428 mt, the first monthly increase since April. The top five exporters of CRC tonnage to the US in August were Brazil; at 19,835 mt; Canada, at 11,380 mt; Netherlands, at 3,968 mt; Argentina, at 3,819 mt; and Mexico, at 3,644 mt. Brazil exported the most CRC tonnage to the US for the first time since February.
Item | US Domestic Spot Price | From Last Week | From Last Month | Pricing Trend | Comments | |
US domestic HRC | $28.00 cwt. ($617 /mt) | No change | up $2.00 cwt. ($44 /mt) | L | ex-mill Midwest | |
US domestic CRC | $34.00 cwt. ($750 /mt) | No change | up $3.00 cwt. ($66 /mt) | K | ex-mill Midwest | |