NEW YORK U.S. steel sheet
prices fell slightly to $33.25 per hundredweight ($665 per ton)
f.o.b. Midwest mill during the first week of September as
service center buyers, anticipating further market drops,
largely held off buying.
Sources said pricing in the
domestic market has started to weaken, and many said they
expect sheet tags to continue to fall. The failure of a lockout
or strike to materialize at two major steel producers and a
falling ferrous scrap market took the steam out of U.S. steel
mills recent price increases, sources said.
"People dont even tell you
$34 (per cwt) right now," one Midwest service center source
The average price of hot-rolled
sheet slipped to $33.25 per cwt from $33.50 per cwt ($670 per
ton) a week earlier. Levels as low as $33 per cwt were
reported, and there were rumors of even lower prices for large
orders. Previously, domestic mills had been said to be starting
off quotes on new orders for spot material at $34 per cwt.
U.S. mills had made headway in
raising prices for flat-rolled products through a series of
increase announcements earlier this summer (
amm.com, Aug. 15), supported by high scrap costs
in August and the possibility of a strike or lockout if labor
contract talks unraveled at either Pittsburgh-based U.S. Steel
Corp. or Chicago-based ArcelorMittal USA Inc.
Now, with a falling scrap
market, a tentative agreement between U.S. Steel and the United
Steelworkers union (
amm.com, Sept. 6) and continued operations at
ArcelorMittal even as negotiations continue, steel buyers said
they see little to support higher prices. Expecting the market
to fall, many service centers said they have postponed booking
new material. "Everyone is just sort of sitting on their
hands," one mill source said.
In addition, many service
centers are carrying more than enough inventory to meet current
demand, sources said.
Service center sources reported
mixed demand in the first days after the Labor Day holiday.
While some reported a flurry of activity, others said the
phones had been unusually quiet.
"Our volumes are off," one
northern service center source said. "Were not off to a
great start in September. Thats not normal for us.
Usually, September is when people come back bright-eyed and
bushy-tailed to buy steel."
Material from mills is readily
available. Steel service centers said mill lead times have
started to shorten in recent weeks, indicating soft demand and
"All of our suppliers have
really short lead times," the northern service center source
said. "If they continue to be this short, theyll have to
do something to finesse some orders."
That likely would involve
discounting from current price levels, sources said, and
domestic producers likely also would need to cut more capacity
through maintenance outages.
A number of raw material
suppliers reported that U.S. Steel has begun maintenance on its
No. 14 blast furnace at its Gary (Ind.) Works, although the
company did not confirm the outage. During its last earnings
conference call, the company said the extended maintenance
outage likely would begin at the end of August and last into
Extended outages may help an
oversupply situation in the flat-rolled steel market, but a
second Midwest service center source worried that "it
wont be enough."
Lower-priced imports of
cold-rolled products also were said to be available, adding
further downward pressure to the market (
amm.com, Sept. 5).
Sources said that even prolonged
labor contract negotiations between ArcelorMittal and the USW
may not help support sheet pricing, given current conditions.
Neither the company nor the union provided an update on