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Steel pricing appears stable: Reliance

Keywords: Tags  Reliance Steel and Aluminum, David Hannah, Gregg Mollins, demand, supply, imports, pricing, service centers mills

CHICAGO — Carbon steel pricing is expected to hold fairly stable this year despite the rising pace of imports, especially in steel plate, Reliance Steel & Aluminum Co.’s top executives said.

“Price increases were announced, as were discounts,” president and chief operating officer Gregg Mollins said on an earnings call with investors Thursday. “But prices were not significantly up or down.”

Carbon flat-rolled and tubing products “have seen modest increases in price year to date, (and) alloy prices are seeing modest surcharge increases, (but) we don’t expect to see any major swings going forward,” he added.

The expectation of stable steel pricing comes despite an apparent influx of offshore material.

Reliance is seeing imports “coming in at a rate seen in 2008. That’s not a good thing but you can’t stop it,” Mollins said. In response, some domestic producers are willing to sell at “foreign-fighter levels,” he said.

“They support us, recognizing that when imports come in at that level and we don’t participate, they must provide us with a competitive price. Because if we lose market share, they lose market share,” he said.

At the same time, demand looks poised to slowly rise this year in most markets, with a more rapid recovery expected in automotive, aerospace and energy.

Reliance has “meaningful exposure to industries that promise growth in the future,” chairman and chief executive officer David H. Hannah said during the quarterly conference call.

Mollins agreed, citing a number of bright spots among Reliance’s customer base. “We are optimistic about oil and natural gas. Aerospace has record backlogs, and the companies supporting it are going gangbusters. Industries including transmission towers, barges, railcars, mining and agricultural equipment are getting better. Nonresidential construction is showing signs of life, for industrial construction especially,” Mollins said.

Meanwhile, a number of the company’s other product segments, including aluminum products, are also showing some signs of strength.

“Midwest (aluminum) spot ingot is trading in a narrow range. Heat-treated aerospace plate has 16- to 18-week lead times,” and a 5-percent price increase has been accepted, Mollins said.

Some customers are on unofficial allocation while producers are running at 85 percent of capacity or higher, he said.

“General engineering aluminum plate has 13- to 16-week lead times. Common alloy sheet has a six- to eight-week lead time. We like what we see in aluminum,” Mollins said.

On stainless steel products, “nickel surcharges are not nearly as volatile as they were in 2011,” he said. Producers got half of a 4-percent price increase announced in January and announced another hike this month. “We hope that will stick,” Mollins added.

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