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Market factors are creating a good climate for sales

Jul 31, 2014 | 08:00 PM | Myra Pinkham

Tags  stainless steel, service centers, flat-rolled, long products, nickel prices, Dan Greenfield, Allegheny Technologies, Dennis Oates Universal Stainless and Alloy Products

Mills and service centers appear more upbeat about the U.S. stainless steel market than they have been in a while, with both flat-rolled and long product suppliers pointing to rising nickel prices as the major source of the optimism.

“It is a good time to sell stainless steel,” one Chicago-based service center executive said, adding that while end-use demand is up virtually across the board, supply issues are really in the driver’s seat.

Dan Greenfield, director of investor relations at Pittsburgh-based Allegheny Technologies Inc., agreed, noting that most companies are far more optimistic than they had been just a few months ago, even with the uncertainties caused by the unexpected decline in gross domestic product in the first quarter.

Rising nickel prices along with the Indonesian ore export ban that went into effect in January have sparked an immediate jump in demand that has pushed stainless steel distributors back into the marketplace, Greenfield said.

“It isn’t that it is a red-hot market,” said Dennis Oates, chairman, president and chief executive officer of Bridgeville, Pa.-based Universal Stainless & Alloy Products Inc. “But there has been a good, fundamental increase in demand.”

Stainless steel distributors were largely focused on working off their inventories when nickel prices were low and stagnant, according to Mark Weberding, director of bar sales at Wyomissing, Pa.-based Carpenter Technology Corp. “Now it seems as if distributors have become more confident about business conditions and have begun to restock more as opposed to ordering hand to mouth, as they had been doing since the economic downturn,” he said.

“With service centers getting a good pull of demand from their customers, they need to be sure they have the stainless steel they need to meet their customers’ requirements,” Greenfield said.

With flat-rolled stainless steel lead times becoming more extendedÑstretching into October through December, depending on the millÑthat isn’t always easy, according to the Chicago-based service center executive. “We have lost some orders because we didn’t have enough stock on hand. But that is better than staring at coils,” he said.

Outokumpu Stainless USA LLC’s mill in Calvert, Ala., formerly owned by Germany’s ThyssenKrupp AG, has been a big factor on the flat-rolled side. The acquisition has changed the dynamics to a market dominated by four players instead of three, while the ramp-up of the Calvert mill is one reason why imports in the U.S. market have not fared as well, said William K. Sales Jr., senior vice president of nonferrous operations at Los Angeles-based Reliance Steel & Aluminum Co.

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