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Steel buyers maintain stocks as demand stalls

Keywords: Tags  steel, steel prices, steel inventories, steel capacity, steel buyers, flat-rolled steel, Institute for Supply Management, Corinna Petry


CHICAGO — Flat-rolled steel buyers continue to keep a tight lid on their inventory levels amid flat demand, even as some producers become "aggressive" in their push to move tons, distributor and processor sources told AMM.

"Things are not bad, but slow. It’s a typical fourth quarter," a Mississippi Valley flat-rolled processor said. "In years past, we might have taken advantage of a good deal and bought a few barges, but this year we’re not doing that much. No matter who wins the election, things won’t improve in the next 90 to 120 days."

In past years, the processor said he has taken a risk and ordered big in front of expected first-quarter demand, but not this year. "In certain cases, we’re sitting on thousands of tons of orders that we have not placed. Some of the orders are due to customers in January and February, but I want to avoid having two to three months of steel sitting in our warehouses at the end of the year," he added.

A Great Lakes buyer said that his company was also keeping stocks in check due to the flat demand situation. "I’m not reducing inventory but I’m not buying as much," he said. On plate, some mills are quoting at cost, so "we will sell what we have in stock" and won’t purchase more than replacement tons, he added.

A survey of steel buyers conducted by the Institute for Supply Management confirms the inventory management trend. According to the group’s October survey, no respondents said they planned to boost inventory over the next six months in spite of more buyers forecasting an improvement in their order rates and backlogs over the next 90 days. About 54.5 percent said they would maintain inventory levels over the next half year, while 45.5 percent said they planned to decrease stockpiles in the coming months.

Those buyers who are placing orders said that it appears only a portion of the $40-per-ton price increase announced in mid-October (amm.com, Oct. 17) has gained traction because some producers are willing to bargain.

"We just bought material within the past week. The increase kind of stuck, and kind of didn’t," a second Great Lakes service center purchasing manager said. "We don’t anticipate much change in the pricing game (through year-end). We will pay similar to what we pay now because the mills are being aggressive in wanting orders, and so there are deals to be made."

The Mississippi Valley buyer agreed. "Mills want to raise prices, but we are also seeing (them) willing to negotiate," he said.


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