Citing mill discipline and some lingering supply problems, the US sheet market is reporting higher cold-rolled coil prices in the Midwest, but market participants have noted that the widening spread between CRC and hot-rolled coil may be short-lived due to lack of buying and impending imports.
Integrated producers this week reported transaction prices of $800-810/st FOB for CRC, while buy-side confirmation remained scarce. Two separate buys were confirmed at the $810/st price within Platts specifications. The buys came from two competing integrated producers, while one of the Midwest buy-side sources claimed that minimills were willing to sell at the $800/st level.
One of the integrated producers claimed there was no current buying below the $800/st level in the Midwest, while the buy-side source also was skeptical of finding prices below $800/st for CRC in the region.
Platts increased its CRC price assessment to $800-810/st from $790-800/st while maintaining its HRC price at $680-690/st. All prices are normalized to a Midwest (Indiana) ex-works basis.
Despite the increase in CRC pricing, some market participants pointed to the approximately $120/st spread between HRC and CRC as approaching its limit, with downward pressure on pricing for both products mounting due to thin buying and import pressure.
One trader claimed to be seeing domestic inquiries for CRC flow in, but for small lots.
"I believe these are buyers who are trying to fill spot requirements while imports are on the way, or reach their facility. There are no big order flows out there," he said.
The trader believed that the current spread between products will be short-lived as mills won't be able to keep prices "propped up with such limited buying."
Another trader also pointed to scarce domestic buying, saying that "we haven't really seen lead times move" and if mills don't start to get any robust orders with current lead times, current pricing levels remain at risk. "If hot-roll falls everything else will fall," he said.
