CHICAGO Demand for
specialty bar products, which was remarkably strong in 2011 and
pushed mill lead times and prices up dramatically, has ticked
slowly downward this year, with most cold finishers and
end-users saying July marked the bottom.
"July was poor," said a source
at a distributor in the upper Great Lakes region. "Volume was
down and price was down significantly, related to the reduction
in scrap surcharges. August has not really changed much, but
for the most part the discounting has stopped."
Spot market pricing for special
bar quality (SBQ) products has followed the trajectory set by
AMMs index for shredded automotive scrap and No.
1 busheling, used as the basis for certain mills
surcharges. The SBQ products tracked by AMM have
declined by $45 this month, based on the amount that
mills raw material surcharges had fallen.
July discounting was sometimes
greater than the surcharge declines, and sources said there
were more tons offered at discounted prices because mills
offloaded quantities to brokers to sell.
"(Brokers) bombarded end-users
with (steel at) $100 per ton less than from a distributor," the
Great Lakes distributor source said.
"Most people have talked about
it: 2012 just didnt happen," a national bar sales
executive said. "There were great expectations. Now there is a
lot of apprehension. A lot of markets are slow, as are a lot of
customers. Mining, automotive, heavy equipment is said to be
goodbut really, where the hell is it? There is quoting
activity, but orders are still slower than earlier in the year,
and the volume of opportunity is lower."
Sources said mill lead times are
six to eight weeks, a far cry from the 13 months quoted during
the first half of 2011.
AMM last week raised
its consumer buying price for shredded automotive scrap in the
Chicago market by $83 per ton following successive drops in the
benchmark over the previous two months that totaled $103 per
amm.com, Aug. 6).
Buyers now expect raw material
surcharges to bounce up by $83 per ton effective Sept. 1.
Charlotte, N.C.-based steelmaker Nucor Corp. confirmed as such
in a letter to customers Friday announcing it would increase
its surcharge for SBQ, rod and semifinished products.
"It may get people off the
fence: 'Bring it in during August, because its going up
in September,'" the national sales executive said.
"Our bar business has flatlined
(and in some products) is down 5 percent vs. last year," an
Ohio Valley service center operator said. He was one of
numerous sources who cited uncertainty about the outcome of the
upcoming elections as well as possible congressional tax and
spending cuts that will come to a head at year-end.
Several sources, however, said
they saw a pickup in inquiries during the first third of
August. "Service centers will stock up for a good autumn," said
a source at a northern processor. "What was down momentum is
now upward momentum. Whatever pricing and surcharge
announcements come out in August will be firm for
An executive at a job shop for
major original equipment manufacturers (OEMs) in the energy
market said his business is "extremely good. We cannot keep
up." He said he is running three shifts and has seen a
7-percent increase in order rates this year vs. 2011.
"Some customers are deferring
things. This week, we have received requests to push things out
to later in the year," a source at a Mid-Atlantic cold drawer
said, adding hes even seeing "some softening" in energy
companies order books.