CHICAGO Spot transaction
prices for hot-rolled and cold-finished engineered bar products
have fallen on average by a little more than $2 per
hundredweight ($40 per ton) due to falling scrap surcharges,
even as domestic producers base prices continue to hold
firm, market sources told AMM.
Transaction prices for the more
common "vanilla" grades of special bar quality (SBQ) steel
products have fallen the most, according to cold drawers,
distributors and processors. Transacted prices for hot-rolled
1-inch round, 1000-series bar has dropped roughly $3.75-per-cwt
($75-per-ton) since March to $49.50 per cwt ($990 per ton),
while cold-finished 1-inch round, 4140 (alloy) is only down 65
cents per cwt ($13 per ton) on average to $82.50 per cwt
($1,650 per ton), sources said.
As transacted prices come down,
some distributors have reported a slight margin squeeze as
competition heats up among those looking to draw down their
fully stocked inventories.
"Youll lose some money
with guys trying to move inventory," said an Ohio Valley bar
processor, noting that nonetheless, the overall market is still
strong. "There are no bloodbaths. Were still busy, and
demand is still out there."
A Mid-Atlantic cold finisher
agreed the SBQ market remained fairly robust, despite the
falling transaction prices. "Bookings are ahead of where we
were last year, and were slightly ahead on the revenue
side by 6 to 7 percent," he said.
And while transaction prices
have been slipping due to falling surcharges, he noted that
base prices have been stable. "Weve only seen the
surcharges falling," he said.
The stable base prices come as
producers normalize their lead times, which, in some high-end
grades and larger diameters, were being quoted out as far as 72
weeks as recently as February.
Lead times are now at between
six and 10 weeks at one mill, 10 to 12 weeks at a second and up
to 16 weeks at a third, said the cold finisher, who checked the
"Some mills still have us on
allocation, and some are still six months out on
thermal-treated products," a Southeastern bar processor
But while demand has mostly held
up, a few buyers said they still worry about summer
"Volume has dropped off a
little," said a Great Lakes drawer. "The mills are caught up to
the supply shortage. I think well see some downward
pricing pressure. A lot of imports are hitting and due in at
lower numbers. Everybody has inventory now. Weve already
seen our competition drop their prices."
But others are more optimistic. "We have our fingers crossed
that it keeps moving forward," the Southern buyer said.