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Distributors analyze import price impact

Jan 28, 2014 | 12:59 PM |

Tags  steel, Association of Steel Distributors, ASD, hot-rolled coil prices, steel imports, flat-rolled coil, Lisa Goldenberg, Delaware Steel Brian Robbins

CHICAGO — Steel distributors questioned the sustainability of today’s high flat-rolled steel prices in the face of current import volumes, as well as estimates of tonnages yet to come.

"On the supply side, there is very serious pricing volatility," Lisa Goldenberg, president of Fort Washington, Pa.-based Delaware Steel Co. and Association of Steel Distributors (ASD) president, said during an AMM roundtable discussion Jan. 23 at the ASD’s regional meeting in Detroit. "These strong prices are not going to stay forever. I don’t see them holding throughout the year."

Regarding spot price movement, distributors take into account facts, analysis and rumors, according to Brian D. Robbins, president and chief executive officer of Perry, Ohio-based Midwest Materials Inc. and ASD president-elect.

As for "the supposed end of index discount deals, some people built up inventory at the old price," he said. Last year had fewer year-end offers of "massively deep-discounted volume," but many distributors did buy steel in advance of higher January prices.

Imported sheet hasn’t yet arrived for 2014 domestic purchase orders.

However, "there is a lot of talk about the imports coming in. It’s just talk; they’re not here yet. But the mere discussion is a very heavy thing on (domestic) pricing. The true supply-demand balance is not as far off as the emotional effect engendered by such discussions," Robbins said.

If demand doesn’t improve soon to chew up mill and service center supply, "it is a case of who cracks first. ... The $700-a-ton (price level) fell pretty quickly to $680 (per ton) and now the numbers are ranging wider," he said.

"Supply is normal, not overabundant. Maybe preparing for April 1, when imports show up," Robbins said.

"Do you expect to wake up April 1 and there will be all this hot-rolled at the docks? Because I don’t see it," Goldenberg said.

"Maybe it’s not April 1, but April 15 or April 20," Mike Lerman, president of South Bend, Ind.-based Steel Warehouse Co., said.

"The stronger mills will take a (competitive) position," he said, adding that U.S. distributors must be aware of import volume, import prices and the spread between import and domestic pricing.

"There is a risk factor there. If domestic tags are $680 (per ton) and falling and the import offerings are at $590 per ton, it wouldn’t be so bad. But if domestic is $680 (per ton) and rising or holding, that’s a different situation," Lerman said. "I think (the current spot price) is $680 (per ton) and falling. That helps quell some of the interest in the imports."

Lerman is glad to be rid of discounts to steel price indices. Under those programs, producers "were just slitting each other’s throats," he said.

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