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Hikes in US sheet prices strengthen imports

Keywords: Tags  steel, cold-rolled coil, hot-rolled sheet, China sheet, India sheet, steel traders, steel imports, Catherine Ngai

NEW YORK — Increased momentum in the U.S. steel sheet market after a recent round of price increases has spilled over to the import market, traders said, with increased interest in foreign material and a decent price spread making deals possible.

"Our import activity is the best we’ve seen in a while," one trader said. "This is more on the cold-rolled and galvanized side. Clearly, because of the nature of the beast, we aren’t seeing much hot-rolled as this is a protected market segment. The price increases ultimately stopped the market decline and demand is showing some resilience. People are buying a little more import."

Earlier this month, U.S. steelmakers led a new round of price increases, landing hot-rolled coil in a range of $33.50 to $34 per hundredweight ($670 to $680 per ton) and cold-rolled coil and coated sheet at $38.50 to $40.50 per cwt ($770 to $810 per ton). While buyers indicated that mills have remained disciplined on higher pricing, the spread has helped some turn to competitive imports.

"It’s been pretty easy to sell imports at this point, no question, particularly coated (product) from India," a second trader said. "The underlying demand hasn’t changed, but maybe there’s more demand for foreign (material) in the short term. We’re now in the price difference that historic import buyers like to see. I think clearly as the disparity between import and domestic price increases, the mix changes, particularly on the East Coast."

Indian and Chinese cold-rolled coil have remained strong in the market despite continued weakness in hot-rolled imports.

Hot-rolled sheet, which was mainly offered from Russia, has remained in the $30.50 to $31 per cwt ($610 to $620 per ton) range delivered c.i.f. Port of Houston. AMM’s price for hot-rolled last week was $33 per cwt ($660 per ton) f.o.b. Midwest mill, with some reporting buys at $32.50 per cwt ($650 per ton).

Traders put cold-rolled imports for late-January and early-February delivery c.i.f. Port of Houston at $33.50 to $34.50 per cwt ($670 to $690) against AMM’s price last week of $38.50 per cwt ($770 per ton) f.o.b. Midwest mill.

Even with the $50-per-ton spread between domestic and foreign prices on some products, which many see as the benchmark for moving to more foreign material from domestic, much of a buyer’s decision to buy imports also relies on how the market will look when that material hits U.S. shores. But traders said they are confident there won’t be a collapse in the near term with demand holding steady.

"No one is rushing to buy imports, but we’re seeing people who weren’t buying at all now say they want 10 to 20 percent of their requirements filled by foreign," a third trader said. "I don’t think there is much of a risk of a collapse. The first quarter is usually a little stronger, and the way the trend is looking now it’s going to continue firming up."

Others agreed. "Things are looking pretty good right now," a fourth trader said. "No one is lining up to buy steel, but the psychology in the market is that it’s not collapsing, especially with customers keeping a tight rein on inventory. It would take some major shock for the market to collapse, and I don’t see that catalyst."

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