Centers’ stocks a concern as demand, prices fall

Oct 06, 2008 | 10:43 AM | Corinna Petry

Nerves are on edge as inventory values are being slammed by weakening steel demand and slipping prices, according to service center executives surveyed Friday.

"Prices are falling," the owner of a Great Lakes-area general line service center said.

Although he hasn't seen any competitors offering "fire-sale prices to generate cash flow yet, I anticipate that may happen, especially with service centers that have too much inventory and may need to liquidate." On the purchasing side, "We are seeing where the mills are unable to maintain the (book) prices. Some tried to move their surcharge into their base price, and they couldn't do it," he said. "Business levels are not great. Everyone is waiting for the other shoe to drop. The environment is very tenuous. You hear the news about industrial production being down, and there are negative signals coming into the market."

A Southeastern steel distributor expressed similar frustration, noting that business has been off. "Florida's residential construction market hasn't been doing too well in the last six to nine months," he said, noting that construction-related business has been down about 20 percent from year-ago levels. "We are trying to get our inventory lower even as the market keeps dropping. It's hard to say what will happen after the election, but I don't see much change until next year. People are just trying to hold on. It's still a competitive market, but the demand is not there."....