NEW YORK The flat-rolled
steel import sector continues to drag its feet as an
oversupplied U.S. market and softening domestic prices make
stateside sales unattractive, traders said, with some noting
that the only place to make money moving forward may be in
niche product imports.
While steel traders have enjoyed
some periods of competitive sourcing this past year, such as
the round of attractive Russian hot-rolled deals last spring
and sales of competitive Chinese cold-rolled in the fall,
attractive import deals in the U.S. steel market have
effectively fizzled out. Behind the shift is a combination of
steady but not robust U.S. steel demand, domestic oversupply,
lower U.S. sheet prices and increased international prices,
trader and buyer sources said.
In fact, sources said that many
of the import offers in the first quarter were similarly priced
or even slightly higher than U.S. prices, leaving many traders
unable to make a margin on commodity-grade sales.
"If youre going to buy
(foreign), you need an incentive. With imports in the first
quarter, you actually had to pay for a premium price. Why buy
imports on such a long lead time when you have to pay more for
it?" said one steel trader, noting that hes now trying to
target specialty steel product sales instead of commodity-grade
material in order to find business.
"Imports on flat-rolled have now
focused on business that domestic mills cannot and do not want
to make," he said.
U.S. offers of hot-rolled coil
have been minimal in recent weeks, according to market sources,
although offers are still coming out of Mexico, Russia and
South Korea. Hot-rolled coil sales into the Port of Houston
were reported at around $600 to $620 per ton c.i.f. this week,
compared with domestic prices of around $605 per ton f.o.b.
Midwest mill. At that differential, it doesnt make much
sense to buy foreign, sources said.
"(The hot-rolled coil import
market) is dead," a second trader said. "Theres very
little action for flat-rolled imports in this country.
Its a drop in the bucket. Theres no impetus, no zip
in steel right now."
Cold-rolled coil imports were
reported at around $680 to $720 per ton c.i.f. Houston in the
past week vs. domestic prices of $705 per ton f.o.b. Midwest
mill. Offers from Brazil, China and Mexico have not been overly
competitive in the past few months, and sources claim that
extra inventory booked in the fall is still available,
particularly on the East Coast.
Meanwhile, buyers said they are
still able to meet most of their commodity-grade demands with
domestically produced steel, particularly in todays
well-supplied market. Market participants point out that the
estimated 1.82 million net tons of raw steel produced in the
United States last week is still too much, considering the
state of the steel market.
Looking forward, traders said
that one of two scenarios must happeneither mills
increase prices or some capacity is taken offlinebefore a
fundamental turnaround can happen in the import sector.
"Im still of the opinion
that this market is extremely fragile," a third trader said.
"We need some kind of significant supply disruption to have a
real short-term squeeze. Generally, the economy is getting
better, but it doesnt seem to translate into increased
volumes or better prices."