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Steel sheet tags mixed, price direction divided

Keywords: Tags  steel, steel prices, hot-rolled, cold-rolled, hot-dipped galvanized, Galvalume, coated, flat-rolled International Trade Commission


CHICAGO — Hot-rolled band prices held their ground while cold-rolled coil tags edged down this week, due perhaps to import pressure.

AMM’s hot-rolled coil price assessment remained unchanged at $33.75 per hundredweight ($675 per ton), while cold-rolled coil tags slipped to $39.50 per cwt ($790 per ton) from $39.75 per cwt ($795 per ton) previously.

Market sources generally agreed that 1,000-ton orders of hot band continued to trade between $33.50 and 34 per cwt ($670 and $680 per ton), but there was sharp disagreement on the direction of cold-rolled prices, with tags reported in a wide range depending on individual mills.

For example, one service center source blamed industry pricing indices—whose methods he said better reflect variation in pricing inputs than movements in market prices—for the slip. But a mill source countered that his company had seen prices drop in recent weeks, speculating that increased import competition might be to blame.

Such talk comes as some market sources said trade petitions could be filed against cold-rolled and coated products—perhaps cold-rolled and galvanized material from India and China and Galvalume from South Korea and Taiwan—around Labor Day. Material wider than 60 inches, largely consumed by the automotive industry, may be excluded from the potential case, while material less than 60 inches wide, primarily used in the construction sector, would likely be included, they said.

But even industry observers who believed a trade case was imminent said much depended on the International Trade Commission’s (ITC’s) ruling on whether domestic oil country tubular goods (OCTG) producers have been injured by offshore material.

The ITC’s final vote on injury, initially scheduled for Aug. 14, has been delayed to Aug. 22. A commission spokesman said that most determinations are not due until Aug. 25, and Sept. 23 in three cases (amm.com, Aug. 14).

If the ITC rules in favor of domestic producers—which is what most industry observers expect—it could set a precedent of U.S. mills being able to claim injury even if they are not bleeding red ink, market sources said. That would be a welcome development since mills need to make money as well as maintain and invest in existing facilities, they said.

In addition, the threshold for injury must not be too high, especially in an improving market, one mill source said. He noted that his company had seen somewhat improved results but said that profits should be higher given the stronger demand. For example, the mill source said apparent consumption for Galvalume was up but that offshore mills had benefited more than domestic suppliers—despite increased U.S. capacity.

A flat-rolled trade case has been rumored to be in the works for weeks—and previous expectations for a filing have come and gone—so other sources questioned whether a petition was still imminent. And even if a case is filed, some market observers questioned its impact, if any, noting that Korea continues to ship large volumes of OCTG to the United States.

While cold-rolled tags may be on shaky ground at present, some market sources questioned the stability of hot-rolled and galvanized tags.

The market could suffer a crisis of confidence on the flat-rolled front if the domestic industry does not ultimately prevail in the OCTG case given that energy tubes are a big consumer of hot band, market sources said. Current pricing and buying strategies also may have already "baked in" a round of flat-rolled trade petitions.

If a petition isn’t filed, consumers—especially traders—could find themselves holding more inventory than they need, market sources said, pointing to limited trucking and rail capacity at Gulf Coast and East Coast ports as well as tight warehouse spaces. Such stocks may not be reflected in Metals Service Center Institute (MSCI) data, they warned, noting that inventories are already up.

U.S. Service Centers held 5.2 million tons of carbon flat-rolled steel in inventory (2.2 months’ supply) in July, up 15 percent from 4.5 million tons (2.0 months’ supply) in the same month last year, according to MSCI data.

Some market sources also questioned higher coating extras. While they make sense given higher zinc prices and stronger automotive demand, they may be difficult to hold given that high U.S. steel prices could continue to attract imports even if flat-rolled trade petitions are filed.

"There are mills coming out of the woodwork," one mill source said. "I haven’t heard of Spanish galvanized being sold in the United States in forever, but it’s already here."

The United States imported 266,150 tonnes of hot-dipped galvanized sheets and strip in July, more than double the 118,615 tonnes imported in the same month last year, according to Aug. 19 data from the U.S. Commerce Department’s Enforcement and Compliance division. Numbers for August are not yet complete, but Spain, which imported only 44.5 tonnes in July, appears poised to import more than 4,700 tonnes in August.

However, others scoffed at the notion of lower tags given a rumor that base price increases could be announced around Labor Day and that coating extras are already on the rise.


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