Executives up and down the steel supply chain say they
are gearing up for strong first- and second-quarter pricing and
demand ahead of a softer second half as 2012 looks poised to
largely mirror 2011.
We are looking for a déjà vu of
2011, a source at one East Coast flat-rolled distributor
said, projecting a stronger 2012 but not a full return to
Some of the first-half strength is already apparent,
he said, citing a marked pickup in order entry. Our order
book is very, very active. We placed a lot of mill orders both
to cover increased business and to beat price increases. We are
doing what everybody else is doing. That is why the mills (had)
sold out rollings through January.
However, theres still some overcapacity on the
sheet side, he warned, raising some concerns as to the
sustainability of the run-up. We arent sure if
(incoming) orders are totally for replenishment or whether
there are meat and potatoes behind it, he
Raw steel capacity utilization rates and tonnage
production surged near the end of 2011, providing some hope for
the ferrous scrap industry that it may carry over into 2012.
The overall utilization rate in 2011 was 74.7 percent, up 4.3
points from 70.4 percent the previous year, according to the
American Iron and Steel Institute. Tonnages also were good:
production totaled 95.59 million tons last year, up 7.9 percent
from 88.57 million tons in 2010, according to the
All things moving forward are looking
better, one Midwest scrap processor said.
Manufacturing seems to be coming back. People are tired
of being down, so this will be the year we work our way out of
The increase in raw steel output was a major
factoralong with a rise in exportsthat pushed scrap
prices to higher levels throughout last year. Those prices rose
so much, in fact, that scrap price averages were the highest in
history, nudging out the boom year of 2008.
The market has been a little bit shaky but
demand has kept a rather steady upwards trend, escalating a bit
almost every day, a Chicago dealer said.
An executive at a Chicago-area flat-rolled service
center agreed that the momentum of recent weeks looks set to
continue into the first half of 2012. We are going out
year-end swinging. Were selling, he said.
There is no doubt the price increases are sticking for
January. We have felt some of that as customers are
accelerating their (steel) intake, even though they dont
usually do that.
But that upward trend could hit a stumbling block in
the third quarter, he said. 2012 will be a repeat of
2011. The first half will be strong and the second half will
The vice president of a national distributor echoed
his sentiments. Business is there, so we anticipate a
first quarter equal to or better than 2011, he said.
Beyond that, however, its still foggy. Nobody wants
to commit to anything.
The expected first-half strength also will work its
way down the supply chain to end-users, sources said. The
purchasing manager for a heavy vehicle equipment producer, for
example, told AMM that 2011 was a very good year
in the truck trailer market and we expect 2012 to be stronger
still, forecasting growth of 10 to 15 percent.
We did see a seasonal cutback in the fourth
quarter because nobody wants to bring in more inventory, but an
onslaught of deliveries are scheduled in the first
quarter, he said. We are increasing tons as demand
dictates and passing along announced price
Outside of the flat-rolled steel market, however,
there is still some concern as to the scope of the recovery in
2012. The long products market, for instance, could still face
some weakness, with one executive at a long products mill
noting that he would like to see the construction market
If the government had money, they would be happy
to spend it (on infrastructure), he said. There is
another call for public funds that are not available. But we