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 told AMM.
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 ready supply.
"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 October.
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 negotiations Friday.