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Flat-rolled steel buyers sitting out

Keywords: Tags  steel, hot-rolled imports, imports, sheet, plate, catherine ngai

LONDON — Flat-rolled steel traders trying to book orders for summer delivery are being priced out of the U.S. market on rumors that prices will  fall in the near term.

"Buyers are very cautious about buying right now, even with price incentives," one steel trader said. "There’s just too much uncertainty in the market, and it doesn’t look like any buyers believe prices will increase. Instead, it’s the reverse. They buy what they want, and then they wait."

A number of U.S. mills have tried to hike flat-rolled prices in recent weeks. While a number of Midwest service centers reported that some of the price hikes were sticking (AMM, April 11), buyers in the Northeast and South said they haven’t seen any price increases since the beginning of the year.

"The mill prices have been flat, even though they’ve made all these unbelievable price increases," one buyer said. "I think it’s all a joke. Some of the mills are willing to negotiate anything—any price for any amount of tons. They’re negotiating off their published price."

Others said that short lead times have kept increases from sticking. "A lot of these price increases were psychological, from the mills’ point of view. They try to change the mentality of the buyers," the first trader said. "As long as you still have lead times of two to three weeks, price increases don’t work."

Hot-rolled import prices at the Port of Houston this week were between $640 and $660 per ton, although transactions were rare, while domestic prices were around $690 per ton ($34.50 per hundredweight). Cold-rolled imports were reported in a range of $740 to $780 per ton, market sources said, compared with domestic prices of $795 per ton ($39.75 per cwt).

Traders said that domestic overcapacity is a major concern, especially with steel production continuing to increase.

"The market is oversupplied, and that’s the ultimate issue. There’s just too much steel right now," a second trader said. "We need a better balance."

U.S. raw steel output totaled nearly 1.96 million tons last week, up 3.1 percent from the previous week, according to American Iron and Steel Association data. Mills have produced almost 26.92 million tons so far this year, up 6.7 percent from the same period last year.

But while hot-rolled and cold-rolled products continue to suffer, the plate import market has been relatively strong in recent weeks. Medium plate is between $780 and $820 per ton at the Port of Houston, maintaining a sizable gap from domestic prices around $930 per ton ($46.50 per cwt).

A third trader said he had seen a "renewed interest" in foreign plate offers and booked a number of offers last week.

But some maintain that the downward pressure on prices doesn’t look to be going away in the near term.

"The domestic (mills) all announced price increases, and I would say that I don’t think even 25 percent of what was announced will stick," a fourth trader said. "You can easily call up one mill and name your price. There’s just unbelievable pressure to sell at a meaningful discount."

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