Centers’ August shipping gains falter this month

Sep 17, 2010 | 11:18 AM | Corinna Petry

August was a surprisingly strong month for steel shipments and steel purchasing in front of anticipated September price hikes, but demand is proving to be much less buoyant this month, market participants said.

Three service center executives told AMM on Friday that they were still taking delivery of steel and placing mill orders in August, both due to orders on their own books and to beat the mill price hike. Those that didn't hedge at all are seeing margins getting eroded by competitors, they said.

"Our purchasing strategy—buying only to fill orders—hasn't changed in the last three months," a Chicago-area flat-rolled coil buyer said. "We did not take a stand and missed opportunities to buy in August."

Even though only about half of the announced mill price increases on sheet products is sticking, the Chicago-area coil buyer said he hasn't been able to pass that along. "Some service centers did take stands on material and are undercutting the price. We're narrowing our (sell side) margins to buy for orders," he said.....