Domestic prices for Brazilian merchant hot-rolled coil steel remained unchanged in the week ended on Friday, despite talks of a possible new price adjustment for July.
Well-placed market sources doubt a new price hike would stick.
A buyer detailed "domestic prices stabilized in the past weeks after some downwards adjustments, but there is a possibility that they can slightly retract further." He also mentioned this tendency is strongly reinforced by the weak demand currently seen and "no expectations of a recovery" in the short and mid-terms.
Comments like emerged after integrated steelmaker Usiminas confirmed it is "evaluating the evolution of the market for a possible price increase in hot-rolled products." According to local media, this adjustment would be around 5%, but Usiminas did not confirm, nor deny this information.
"I don't know how many drinks they had," said a distributor when asked about the possibility of a new price hike for next month. "There is a great fight among the producers when talking about prices. Currently, HRC is around Real 2,000/mt, excluding taxes. I don't see the slightest change of this price increase taking place."
A trader queried about what price basis is being used for the increase.
"If the mill is considering prices with discounts, which is currently happening, then a 5% increase would bring HRC price to around Real 2,100/mt [ex-works, excluding taxes] -- which is a healthy and sustainable level of price," the trader said. "I have heard of HRC being offered below Real 2,000/mt [same basis]."
The distributor also shared some thoughts about discounts, saying "mills are offering some special batches with good discounts."
A second trader was more definitive when talking about the possibility of a new price hike. "I don't see this sticking," he said.
None of the sources contacted mentioned about any price comments coming from other HRC producers in Brazil until Friday.
S&P Global Platts' assessment of Brazilian domestic HRC was stable at Real 2,085/mt ($625/mt) ex-works, excluding taxes, on Friday, based on a range of Real 2,000-2,170/mt.
Foreign exchange rate on Friday 23 was Real 3.33/$1.
