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Commodity-grade steel imports trickle to halt

Keywords: Tags  imports, steel, flat rolled, steel traders, East Coast, Port of Houston, cold-rolled, catherine ngai

NEW YORK — The flat-rolled steel import sector continues to drag its feet as an oversupplied U.S. market and softening domestic prices make stateside sales unattractive, traders said, with some noting that the only place to make money moving forward may be in niche product imports.

While steel traders have enjoyed some periods of competitive sourcing this past year, such as the round of attractive Russian hot-rolled deals last spring and sales of competitive Chinese cold-rolled in the fall, attractive import deals in the U.S. steel market have effectively fizzled out. Behind the shift is a combination of steady but not robust U.S. steel demand, domestic oversupply, lower U.S. sheet prices and increased international prices, trader and buyer sources said.

In fact, sources said that many of the import offers in the first quarter were similarly priced or even slightly higher than U.S. prices, leaving many traders unable to make a margin on commodity-grade sales.

"If you’re going to buy (foreign), you need an incentive. With imports in the first quarter, you actually had to pay for a premium price. Why buy imports on such a long lead time when you have to pay more for it?" said one steel trader, noting that he’s now trying to target specialty steel product sales instead of commodity-grade material in order to find business.

"Imports on flat-rolled have now focused on business that domestic mills cannot and do not want to make," he said.

U.S. offers of hot-rolled coil have been minimal in recent weeks, according to market sources, although offers are still coming out of Mexico, Russia and South Korea. Hot-rolled coil sales into the Port of Houston were reported at around $600 to $620 per ton c.i.f. this week, compared with domestic prices of around $605 per ton f.o.b. Midwest mill. At that differential, it doesn’t make much sense to buy foreign, sources said.

"(The hot-rolled coil import market) is dead," a second trader said. "There’s very little action for flat-rolled imports in this country. It’s a drop in the bucket. There’s no impetus, no zip in steel right now."

Cold-rolled coil imports were reported at around $680 to $720 per ton c.i.f. Houston in the past week vs. domestic prices of $705 per ton f.o.b. Midwest mill. Offers from Brazil, China and Mexico have not been overly competitive in the past few months, and sources claim that extra inventory booked in the fall is still available, particularly on the East Coast.

Meanwhile, buyers said they are still able to meet most of their commodity-grade demands with domestically produced steel, particularly in today’s well-supplied market. Market participants point out that the estimated 1.82 million net tons of raw steel produced in the United States last week is still too much, considering the state of the steel market.

Looking forward, traders said that one of two scenarios must happen—either mills increase prices or some capacity is taken offline—before a fundamental turnaround can happen in the import sector.

"I’m still of the opinion that this market is extremely fragile," a third trader said. "We need some kind of significant supply disruption to have a real short-term squeeze. Generally, the economy is getting better, but it doesn’t seem to translate into increased volumes or better prices."

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