Flat-roll tag hikes ignite distributor buying frenzy

Dec 17, 2010 | 12:52 PM | Corinna Petry

Low U.S. flat-rolled stocks—especially among service centers that traditionally consume at least 35 percent of all domestic output—has cemented the flurry of recent price hikes that will continue over the next two weeks, sources say.

"Most probably, many steel distributors bought the next two to three months of consumption in less than four weeks," Michelle Applebaum, analyst at Steel Market Intelligence, Chicago, said in a research note.

Interviews with six flat-rolled service center executives bear this out. Five of the executives told AMM they had placed substantial volume orders with the mills in October and November, thus beating the December and January price hikes.

"I think inventories are pretty low. I think the fact that inventories are light is why the mills are so successful with the increases. We did buy all the steel we needed in early November to fill our pipeline through the end of the first quarter—and even to cover some orders in April," the president of a Great Lakes flat-rolled service center said. "We are in the minority."....