Service centers slightly optimistic early in 2014

Feb 28, 2014 | 07:00 PM | AMM staff

Tags  service center shipments, steel shipments, aluminum shipments, MSCI, ASD, Association of Steel Distributors, Metals Service Center Institute, Morgan Stanley & Co. LLC Evan Kurtz

Even before a single iota of official data was in for the first quarter of the year, a number of steel distributors said they expected demand to tick up in 2014.

Metal suppliers and consumers in four Federal Reserve Bank districts forecast in late January a modest improvement in business activity during the first quarter, according to the Federal Reserve Board’s current economic conditions report, known as the Beige Book. At about the same time, service center executives told AMM at the Association of Steel Distributors (ASD) regional meeting in Detroit that they expect flat-rolled steel demand to grow between 1 and 5 percent across all end-use markets in 2014 compared with last year.

While not everyone in the service center sector is as sanguine, sentiment early in the new year does point to general expectations for improved business for at least the first part of 2014, and perhaps the entire year.

Business conditions and demand appear to be looking up for U.S. and Canadian steel service centers, buy- and sell-side sources said, although a number of market participants said that this winter’s severe weather across large parts of the United States hurt shipping levels.“The weather has really crippled transportation. I can’t get things out and I can’t get things in,” one manufacturing source said. “Demand-wise, I’m not hearing people talk about the sky falling. I think we’ll pull out of this, and everything I’m hearing on the end markets is that this year will be better and that the second half will blow up.” Despite challenging winter conditions, January activity looked “decent,” Morgan Stanley & Co. LLC analyst Evan Kurtz said. “January service center data point to seasonally rebounding activity,” he wrote, noting that shipments rose strongly sequentially but were below the seasonal average.....

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