NEW YORK — The U.S. steel import market has hit a flat spot in recent weeks, driven by a lack of decent sales, domestic overcapacity and pessimism globally, market sources told AMM.
"Everyone is in a bad mood. It’s making it difficult to stay upbeat and difficult to stay aggressive," one trader said. "It’s kind of confusing statistically, too, because manufacturing is supposed to have picked up a bit. It’s not the end of the world, but clearly we’ve hit a flat spot."
Hot-rolled sheet imports are in a range of $645 to $660 per ton at the Port of Houston while cold-rolled sheet is between $740 and $780, traders and buyers said. In comparison, domestic Midwest hot-rolled prices are around $675 per ton ($33.75 per hundredweight) and domestic Midwest cold-rolled is about $780 per ton ($39 per cwt).
With imported prices only marginally lower than domestic material, buyers are hesitant about booking foreign orders.
"No one is buying. If you look at the fourth quarter, it was extraordinary for everyone. In the first quarter, it carried over a little. Then we hit the wall," one buyer said. "Foreign offers aren’t coming in here that cheap. And if someone offers me something for late August-September delivery, I’m not sure I can risk it."
The U.S. manufacturing sector expanded in April at its strongest pace since last June, according to the Institute for Supply Management. However, traders and buyers said they have yet to see that translate directly to their business.
In fact, April steel import license applications hit their highest number in more than a year, according to Commerce Department data released Wednesday (AMM, May 3). The gains, led by plate in coil from Russia and hot-rolled sheet from South Korea, likely were from orders placed in the late fourth quarter and early 2012.
Meanwhile, traders said they’re waiting for lower offer prices from offshore mills, including those in China, Turkey and Eastern Europe. The current lack of lower-priced imports, combined with sliding domestic prices, has left traders unable to sell without making a loss.
"We’ve seen a bit of a slowdown for the most part. Everyone is being more cautious than usual going into the summer, and prices are a . . . touch on the drop," a second trader said. "It’s not too terrible, and manufacturing results that came out recently were quite positive. We’re waiting to hear from Turkey right now."
On the international front, market sources said that frustration with slow-moving economies in Europe and Asia has caused concern moving forward. "I’m pessimistic about Europe right now," a second trader said. "I don’t see that coming out of the tunnel, especially with issues over there."
Others agreed, adding that conditions must improve worldwide before fundamental change can happen.
"I don’t want to be pessimistic, but things look bad out there—in Asia, in Europe and here. The spot market is bad, and I know a lot of people who have inventory on the ground and there’s no action," a third trader said. "No one is asking for anything and no one wants to buy. There’s just too much steel. If you have stuff on the ground and you can’t even match the low-priced domestics, you can’t win. It’s been very frustrating."