|Prices for imported flat-rolled steel into the United States are falling amid questions about whether the market has bottomed or might see further declines.
Fastmarkets AMM's price assessment for imported hot-rolled coil slipped to $650-700 per short ton ($32.50-35 per hundredweight) on Wednesday January 9 from $660-720 per ton previously.
That range represents offers for material from South Korea, Egypt and Argentina for delivery as soon as March to Houston-area docks, sources said. South Korean material is subject to a volume quota under Section 232, and therefore is exempt from the 25% tariff applied to steel from most other origins.
Relatively few offers are being made, and buyers are scarce because they are leery of committing to imports - and the longer lead times that come with them - in the face of falling US prices. Some are afraid any shipments ordered now might arrive at higher prices than domestic material.
Fastmarkets AMM's daily US Midwest hot-rolled coil index stood at $709.40 per ton ($35.47 per cwt) on January 9.
"Now the question is: 'How low does it go?' [US] mills are saying it's close to a bottom. But futures point to below $35 [per cwt]. And scrap dropped like a rock," one Midwest service center source said.
Domestic mills will probably try to hold the line at approximately $700 per ton in the short term. But unless market conditions improve, there will be little reason for prices not to drop to approximately $660 per ton. That number would be in line with integrated mill costs of $600 per ton plus profits of $60 per ton - and mills would probably fight harder to keep prices from falling below that floor, the service center source reasoned.
Meanwhile, Fastmarkets AMM's price assessment for foreign cold-rolled coil has dipped to $790-820 per ton from $800-840 per ton in the prior assessment. That range includes offers from Vietnam and Russia, slated to arrive at US ports by May.
Those offers were not seen as competitive, given Fastmarkets AMM's price assessment for domestic cold-rolled at $820 per ton.
"With the 25% [Section 232] barrier, it's not easy to compete with the local mills," an East Coast trader said. "Why would you order something for May arrival to save [an average] $1 [per cwt]?"
Fastmarkets AMM's price range for imported thin-gauge hot-dipped galvanized material has tumbled to $980-1,040 per ton from $1,060-1,110 previously.
Foreign mills are able to offer lower prices in part because global steel prices are falling and so they can secure HRC feedstock at reduced levels. But domestic mills nonetheless remain competitive - with at least one said to have booked long-term business with US customers at current low prices.
US mills making such deals are probably looking to lock in prices at numbers they believe will be profitable - but do so at the expense of being able to raise their prices should market conditions improve, a second East Coast trader said. "I guess [US mills] are pessimistic. It doesn't make sense to me."
Import orders have been scarce since domestic prices started declining in earnest in August and September. Therefore, US mills should see better demand later in the first quarter of 2019 when offshore supplies dwindle, the second East Coast trader said, echoing sentiments shared by other sources.
Fastmarkets AMM's price assessment for foreign plate was unchanged at $880-900 per ton. Foreign plate, like domestic material, appears to have held up better than hot-rolled coil prices.