CHICAGO Steel service
centers experienced a healthy first quarter but are already
seeing a slight softening during the second quarter, sources
have told AMM.
U.S. and Canadian distributors
shipped 12.86 million tons of steel products in the first three
months of 2012, up 6.3 percent from just under 12.1 million
tons in the same period last year, according to the Metals
Service Center Institute.
"Our March shipments were
strong, but bookings are a better story of whats going to
happen. They are definitely slower, and that includes the
automotive segment," a source at a Michigan flat-rolled
distributor said. "I dont think there is as much
optimism. The price of steel was raised to $700 (per ton), then
to $720, but we are in for a flat market. They might wallow for
Many buyerseven those who
need to replace inventorieshave not been easily enticed
into placing orders, despite some mills offering to roll
minimum quantities at around $10 below list price.
"The first quarter was a little
bit better than last year, but ended with a bit of a sputter,"
an Illinois sheet distributor source said. "Everybody is still
on the fence with where pricing is going. Did (announced hikes)
stop the drop? Quoted prices are up from the mills, but closed
deals arent that drastically changed."
Producers "are getting $700 or
close to it, but in spots, with open schedules, they are making
a few deals," he added.
The Illinois distributor source
was one of several in the past couple of weeks who said
theyre being quoted lead times of three to five weeks but
material is arriving sooner than that.
At the distribution level, "the
competition is not raising prices as you would think they
should, with two published increases and a third on its way,"
he said, citing chatter about a $15- to $20-per-ton increase
coming before the end of April from the mini-mills. "People are
going as lean as possible."
Inventories held by U.S. and
Canadian service centers totaled 10.58 million tons at the end
of March, down 0.7 percent from 10.65 million tons a month
For one large Gulf Coast
operator, "March was a scorcher, the best month in two years,
and we are running ahead (of March) in April." He cited the
continued strength of the natural gas sector, noting that the
effects of $2-per-mmBtu pricing "hasnt rippled through
the supply chain."
There is still "a lot of pipe in
the import yards," he said, and a "normal amount" is still
scheduled to come in. Although "margins are not good, we feel
pretty good about the second quarter."
An executive at a national long
products distributor also said hes seeing a slight
slowing in April. "Its nothing to panic about, but
its not as good as March on a daily shipment basis," he
Peers he met with this week also
are seeing softer bookings in the United States and Canada. "I
was surprised with the hollow structural section (price)
increase," he said, referring to recent hikes announced by HSS
mills (AMM, April 17). "Demand does not justify it at