November 20, 2008

US HR transaction prices for July remain flat MoM

Purchasingdata.com is posting an early July transaction price for hot rolled steel sheet in the Midwest at USD 1,068 per ton. This price average is just 1% higher than the USD 1,052 price average for June although it is 96% higher than in December 2007.

As per report, although some market researchers are estimating July bookings at prices in a USD 1,074 to USD 1,080 range, but transactions actually are being reported this week as low as USD 1,060 for deliveries within four weeks.

Interestingly, the mills still are looking for a consensus on future hot rolled pricing: Nucor now has an August list price of USD 1,120 per tonne for hot rolled sheet while reference prices for US Steel and ArcelorMittal in September are USD 1,100. All of these proposed prices are less than expected earlier, which supports the view that many buyers at original equipment manufacturing firms and service centers have gone on vacation.

In fact, some market analyses suggest hot rolled sheet prices could fall to USD 900 per tonne by December due to the seasonal fourth quarter slackening in demand.

One buyer said that the tentative nature of future pricing as evidence that sheet prices may have peaked. He said that “The price increase could prompt some to buy in advance, but I think we are pushing the enveloper.”

Mr Corrado De Gasperis CEO of Novamerican steel service center said in his quarterly earnings statement that recent monthly price increase by the steel mills appear relatively weaker than prior increases. He and other analysts say that the initial spike in prices were pinned to cost increases and then by allocations of supply as the mills boosted exports. However, there has not really been a surge in exports and now are slowing because of the strengthening dollar.