Steel Products Prices North America

Foreign Prices & Lack of Supply are Supporting Higher Flat Rolled Pricing

Written by John Packard

AK Steel followed the rest of the steel mills as they announced a $30 per ton price increase just 17 days after announcing their last flat rolled increase. This is the third price increase out of AK Steel so far this year. With the latest round of increases, AK Steel minimum base price levels are: hot rolled = $25.50/cwt ($510 per ton), cold rolled = $31.50/cwt ($630 per ton) and galvanized = $32.00/cwt ($640 per ton base plus extras).

Even with their announcement, AK Steel customers are advising Steel Market Update that there is little to no spot tonnage available. We heard from a manufacturing company today who told us, “The domestic boys seem to be pretty independent these days. AK, who we have historically bought from is not interested in spot buys at all.”

This same company went on to tell us, “USS has a small gap to fill in one of their mills for cold rolled so they are interested in us a little. $.30 per lb. is what they are quoting us now.”

We are hearing from others in the industry tightness could be coming if the cards fall in a particular way. We heard from one source this afternoon that a company was desperately looking for hot rolled after one of their sources (involved in the HRC trade suit) cancelled their European order bound for the U.S.

A second source told SMU that their “well priced” steel from South America was in jeapardy of being cancelled having nothing to do with trade suits but rather the price it was sold at and the fact that the market prices have risen well above $350 on hot rolled.

We heard from a number of buyers that their previous foreign suppliers are not competitive (or not available) against domestic pricing.

We heard from a trader, “…HR pricing has jumped for many of the Asian mills, so they say, and therefore coated pricing has bumped up accordingly.  Korea and Taiwan have both been the beneficiary of China’s ouster from the US market and are in fact showing signs of lateness in shipping, and of course fully booked lines add another layer of increase to the mix.”  

We got the following comments from a manufacturing company who is a regular buyer of foreign steel, “Prices are rising as I type…” When asked if they were still getting material out of India we were told, “Not really. We inquired but the price didn’t make since & they were unsure of vessel availability anyway. Don’t miss China but wish India was not part of the trade suits.”  This buyer told us they tried placing tonnage with Vietnam, UAE & Pakistan “We placed an order one day and later in the same day it couldn’t (or wouldn’t) be confirmed. It’s kinda ugly right now.”

Which leads us to mention that the domestic steel mills continue to produce steel at 71 percent of capacity. But, in reality the number for cold rolled and coated products is much higher. Galvanized and Galvalume could well be at capacity.

Now we look at the fact that inventories are falling at the service centers and there is less foreign steel coming into the country (before taking into consideration the orders that are being cancelled) and those foreign tons will need to be replaced – in many cases by domestic steel mills. Let’s think about this for a moment… In March 2015 the U.S. imported 365,000 tons of galvanized. This March the projected number is 226,000 tons. If the U.S. truly needs the extra 100,000-140,000 tons where will it come from? The average coating line in the U.S. produces somewhere around 25,000-50,000 tons per month (CSN is rated at 27,000 tons, the newest lines at AMNS Calvert around 45,000 tons per month).

One service center executive told us this afternoon, “I think the pundits are too pessimistic short term.  They miss that prices, even at $415, are too low.  I think the next pull back will establish the real bottom of the market.  Meaning if get up to 450, then falls back to 415, that would a more reasonable floor price than 350. The import market is still stalled in the US.  But prices now out of China are still up.  I expect imports to track higher, and thus support the current prices in the US.  Whether it still supports the US market when prices are north of 450, we’ll have to see.”

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