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Stainless producers step up discounts for larger-volume orders

Keywords: Tags  flat-rolled stainless steel, stainless steel, Allegheny Technologies Inc., Brad Hite, Stainless Sales Corp., Chicago, Bill Sales, Reliance Steel & Aluminum Co. Dennis Oates

Domestic flat-rolled stainless steel producers, who largely had been sticking to their guns on base price increases announced a few months ago, are increasingly turning to discounting, particularly for larger-volume orders.

“Base prices have been difficult because of increased low-priced imports and the current uncertain economic outlook,” a spokesman for Allegheny Technologies Inc. (ATI), Pittsburgh, said. That uncertainty has affected stainless steel restocking, not just for service centers but for everyone in the supply chain.

U.S. flat-rolled stainless mills announced a base price increase through a 2-percent reduction in the functional discount.

Brad Hite, president of Stainless Sales Corp., Chicago, applauded the move. “Given declining nickel prices, we could use this increase,” he said, while acknowledging that higher stainless prices also could carry with them the risk of opening the market to imports from Asia.

Stainless mills have been sticking to their guns on smaller-volume orders, Bill Sales, senior vice president of nonferrous operations at Reliance Steel & Aluminum Co., Los Angeles, said, but have been willing to negotiate when it comes to higher-volume deals.

Dennis Oates, chairman, president and chief executive officer of Universal Stainless & Alloy Products Inc., Bridgeville, Pa., said that while there has been a lull or pause in demand since early May with a change in customer buying patterns, “the actual end-use story is still pretty good.”

The problem lies in a combination of factors, including a gloomier economic outlook worldwide, falling nickel and other alloy prices, and a noticeable increase in imports from China, according to Carl Moulton, ATI’s senior vice president, international, noting that this is making it hard to paint an accurate picture of true consumption.

Just how much of a factor imports are, or will be going forward, remains a point of debate. While there was a pickup in import orders earlier in the year, as of early July they were a bit of a gamble amid falling raw material surcharges, said a product manager at O’Neal Steel Inc., Birmingham, Ala.

Also, no one has been in a hurry to give away the advantages they make on the buy, Bob Mraz, vice president of sales and marketing at TW Metals Inc., Exton, Pa., said. “Master distributors don’t want a blowout like the one they saw a few years ago.”

Nevertheless, Hite said his company and some other service centers have been looking to buy imports directly from foreign mills rather than through brokers as they seek to get a better buy.

“We will get through this. Stainless is still a good business and the manufacturing economy in the United States is doing well,” the ATI spokesman said. 

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