CHICAGO With demand
expected to wind down over the next 10 weeks, buyers of
hot-rolled and cold-finished special bar quality (SBQ) products
are sitting on the sidelines as they wait for prices to bottom,
which they anticipate will happen in December.
Meanwhile, Octobers market
for SBQ has been weaker for some than Septembers, which
was already weaker than it was a year earlier.
"The market will be soft through
the end of the year, as theres nothing to spur it along,"
a bar distributor in the lower Great Lakes predicted. "The
Marcellus Shale has seen a pickup, but theres too much
overstock. Its a slugfest between the mills and between
the distributors (to grab orders)."
A southern cold finisher agreed.
"We are seeing too much supply (at a time when) manufacturing
is being very cautious. ... Inventories are high, (which
places) downward pressure on prices," he said. "We think there
will be a December buy, that (the) bottom will have been
reached. Nobody wants to see it go lower, but it will."
A bar processor in the same
region argued that base prices have remained flat this month,
adding that he doesnt foresee any change in base pricing
even through the first quarter of next year.
"We are slowing up except for
really good buys," a northern distributor said. "Its a
typical fourth quarter, where you dont want to get heavy
on inventory. We are still buying truckload quantities, but
customers are not bringing in too much of any particular
An East Coast distributor noted
that "material costs from the mills have been coming down in
the last couple weeks. We have put word out to our purchasing
department not to buy based on the inventory we went through
during the first three quarters. Some customers are starting to
There is also new pressure on
pricing at the service center level, an Ohio Valley source told
AMM. "If a customer calls to say youve been
selling him at 60 cents (per pound) for two years but now
thats not good enough, you meet the market or sit on the
steel. But we want to get rid of steel," he said. "Scrap is
expected to drop another 3 cents a pound (affecting November
A Great Lakes forger said he
doesnt know of any customers reporting less than a
25-percent reduction in activity since midyear. "Its
across the board. The only industry holding up is oil and gas,"
Steel mills "spent a year
getting prices up, and now we see discounting going on," a
Great Lakes service center executive said. "We now are getting
the same price for half a truckload (as full loads previously)
because mills have capacity and theyll do a deal."
Spot prices for hot-rolled 1000
series round bar below 3 inches is said to be averaging $41.40
per hundredweight ($828 per ton). Sources pegged hot-rolled
4100 series in the same diameter range at $44.90 per cwt ($898