Potential slowdown may not hurt steel service centers

May 29, 2012 | 04:42 PM | Corinna Petry

Tags  steel service centers, metal distribution, Metals USA Holdings Corp., Lourenco Goncalves, MSCI, Corinna Petry

It’s a case of good news/bad news for steel service centers right now. The good news is that distributors experienced a healthy first quarter, with shipments growing 6.3 percent over the same period in 2011. The bad news is that many service centers have seen a slight softening during the second quarter.

“We continue to see good demand in the vast majority of sectors, and pretty much everywhere throughout the country,” Metals USA Holdings Corp. chairman, president and chief executive officer Lourenco Goncalves said during the company’s quarterly earnings conference call in April. “We don’t see mills interested in raising prices, and we expect prices to be range-bound during the second quarter.”

U.S. and Canadian distributors shipped 16.93 million tons of steel products in the first four months of 2012, up 6.1 percent from 15.95 million tons in the same period last year, according to the Metals Service Center Institute (MSCI). But April shipments of 4.07 million tons were down 7 percent from 4.38 million tons the previous month.

“Our March shipments were strong, but bookings are a better story of what’s going to happen,” a source at a Michigan flat-rolled distributor said. “They’re definitely slower, and that includes the automotive segment. I don’t think there’s as much optimism. The price of steel was raised to $700 (per ton), then to $720, but we’re in for a flat market. They might wallow for a while.”....