LOS ANGELES Flat-rolled steel prices may have hit bottom on the West Coast as buyers speculate on the possibility of trade cases and price increases.
Local prices for domestic hot-rolled coil are estimated at $33 to $34 per hundredweight ($660 to $680 per ton) f.o.b. mill for medium to large service centers, with end-users and other large consumers about $1-per-cwt ($20-per-ton) lower. While this represents a decline of about $1 per cwt ($20 per ton) from a month to six weeks ago, rumors of impending trade filings by domestic steelmakers have convinced some buyers that prices may not decline further.
Moreover, domestic mills outside this region havent increased their participation on the West Coast, contrary to expectations about a month ago (amm.com, June 11), as lead times in the Midwest have moved out amid anticipation of price hike attempts.
"This is the time of year when the Midwest mills usually decide prices have gone low enough," said a market source, speculating that price increase announcements would at least stem any further erosion even if theyre not ultimately successful.
California Steel Industries Inc. (CSI) notified customers June 18 that it had achieved its "planned capacity" for production and shipment in August. "Therefore, our August order book for all flat-rolled products is now closed," the Fontana, Calif.-based producer said in a note to buyers.
CSI hasnt announced a price hike since April 8, when it said it would raise galvanized by a minimum of $30 per ton ($1.50 per hundredweight) while increasing other sheet products by $20 per ton. The regions other major producer, Pittsburg, Calif.-based USS-Posco Industries Inc., slated a $30-per-ton ($1.50-per-cwt) increase April 4 on hot-rolled pickled and oiled, cold-rolled annealed and galvanized sheet.
Hot-rolled from South Korea, the West Coasts largest offshore source, is estimated at $32 to $33 per cwt ($640 to $660 per ton) f.o.b. mill to medium to large service centers and about $1 per cwt ($20 per ton) or more lower for the largest buyers for late-October delivery.
Initial offers of New Zealand hot-rolled were reported at around $34 per cwt for October arrival. While market sources noted that prices from New Zealand often settle lower, they said tonnage is currently being offered on a "very limited" basis.
Chinese cold-rolled sheet for November arrival remains significantly below domestic price levels at an estimated $31 to $32.50 per cwt ($620 to $650 per ton), depending on the size of the buyer.
Despite the possibility of both domestic anti-dumping complaints and price hike attemptsthe latter coming first from Midwest millsfew buyers appear inclined to hedge material in anticipation of any supply disruption that could follow the filing of trade cases. They point out that earlier forecasts of market turnarounds or shortages since the 2008 downturn have, more often than not, left them with surplus inventory. This time theyre staying on the sidelines.
"These days, people arent willing to roll the dice" by hedging, a distributor source said.