oversupply, soft demand and negative sentiment continue to
plague the steel market, Olympic Steel Inc. president and chief
operating officer David Wolfort said during the companys
quarterly earnings call Thursday.
However, steel price increases
announced since October should bring "some relief" from falling
tags for most of the year, he said.
supply and low demand pose challenges to price hikes, Wolfort
said that the last hike may gain ground as buyers whittle down
inventories. He added that he believes coil prices hit their
trough last month and that the latest price increase will be
supported by higher scrap pricing and lower mill output.
"The price hikes were needed,"
he said, crediting Pittsburgh-based U.S. Steel Corp. with the
With the support of higher scrap
prices in November and $50-per-ton increases announced this
week by West Chester, Ohio-based AK Steel Corp., Charlotte,
N.C.-based Nucor Corp. and others (
amm.com, Nov. 7), "the first increase has been
absorbed and part of the second increase will be absorbed,
moving the price up from a very sour bottom," Wolfort said.
Sheet inventories have declined
"quite a bit," so the latest increase will support "upward
momentum" in the spot market due to lower inventories and "more
spot market participation" by buyers than during the third
quarter, he said.
The U.S. steel market was
pressured by "an onslaught of imports" this year, Wolfort said.
"Plate was a big part of it. There is no doubt that foreign
(supply) has put pressure on plate pricing, and domestic
producers have had to respond in order to maintain their market
"I dont see a big
differential between foreign and domestic pricing," Wolfort
said, adding that pressure on U.S. tags will persist "as long
as the bandwidth is narrow."
The pressure on the value of
steel here and abroad has been "exacerbated by too much
production," he said. "Even with RG Steel not there anymore,
others are still producing without curtailing supply. (Steel
buyers) participation (in the market) grew, but not at
the rate of supply domestically or globally. Too much supply,
too little demand: Its not any more magical than
Olympic Steel posted
third-quarter net income of nearly $1.64 million, down 73.3
percent from $6.14 million in the same period last year on
sales that slipped 1.7 percent to $342.56 million. Flat-rolled
product sales declined 2.8 percent, but tubular and pipe
product sales increased 3.4 percent, the Bedford Heights,
Ohio-based company said.