Posted on 13 Aug 2018
US auto builds are expected to be healthy, but domestic mills will likely encounter complications during sheet pricing negotiations due to the tenuous - and tariff-dependent - rise in pricing, Kallanish hears from market sources.
A source at one top-tier auto supplier says builds have been "... more consistent and stable" than last year, with truck platforms dominating at 70% of the market.
"With inventories entering the second half at six days lower than they were last year, I think the build remains at a healthy, consistent level," he says.
Complicating matters, says a service centre tuned in to the auto sector, is that hot-rolled prices rose rather drastically and are underpinned by the always-contentious 232 tariffs. Identifying a natural market price on which to base contracts could be difficult, he says.
"The mill management teams we talk to are not sure where the market will take them," he says, adding that negotiations will take place according to schedule, "... but they will have to provide escalators or price adjustments."
Kallanish currently puts hot-rolled coil at $920-940/short ton, with cold-rolled at $1,000-1,030/st. All prices are ex-works, domestic mill.
