As both imported and domestic steel prices continue to decline, U.S. buyers are becoming concerned with additional price drops.
Despite the continuing decrease in imported steel prices, buyers in the U.S. remain hesitant to purchase in fear of additional price drops. In addition, buyers are concerned that imported steel, which is ordered today, will arrive at U.S. ports at a higher price than what would be available from domestic mills, according to an AMM report.
These differences have become more pronounced in recent weeks. Offshore buys have been met with longer lead times, while domestic mills are offering consistently short lead times. As such, despite good demand, many buyers are reluctant to add material to their inventory unless absolutely necessary.
Meanwhile, the price range for Imported hot-rolled coils has narrowed to around $32.50-34 cwt CFR port of Houston from a previous range of $32.50-35 cwt. Exporting countries that fall under that rage include Egypt, South Korea, and Serbia with an estimated delivery at U.S. ports in March or April. Similarly, Mexican hot band also falls within that range, but with estimated delivery in February. Compared to previous prices, HR’s current prices are down 3.6% from the beginning of 2019, and over 25% lower than the peak prices of $43.75-45 cwt in July of 2018.
The Midwest US hot-rolled index, a measure of domestic prices, has also been declining. As of Wednesday, 1/23/19, the price was listed at $34.04 cwt FOB mill. This price is down 6% from $36.21 at the beginning of 2019, and 25.7% less than the peak price of $45.84 cwt in 2018.
As domestic output increases, concerns are rising that U.S. prices have not seen the end of their decline. Coupled with a lesser than expected drop in imports and greater than expected drop in U.S. exports, industry traders are worried about market saturation and excess supply.
Imported cold-rolled coil prices have also declined. As of Wednesday, prices are listed as $38.50-39.50 cwt CFR port of Houston, while previously prices were ranging around $39.50-41 cwt. Countries currently offering such prices are Russia and Vietnam, with expected delivery of April or May. Furthermore, Vietnamese mills have been offering product for even lower prices. This could take away orders from domestic mills, who in response have done the same in order to attract orders, according to AMM’s report. This increase in Russian presence in the market is said to have been a result of the void created by the Section 232 tariff against Turkish exports, which has risen from 25% to 50% in August of 2018.
Hot-Dipped Galvanized Coil
Similar to Hot-Rolled and Cold-Rolled coils, the price estimate for imported thin-gauge hot-dipped galvanized material has been declining, currently listed as $48-50 cwt CFR port of Houston from $49-52 cwt previously. This price range correlates with imports from the Middle East with an estimated delivery in April or May, and Mexico with an estimated delivery date of February or March.← Back To News