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Stalled prices could spark steel sheet increase

Keywords: Tags  flat-rolled steel, steel sheet, hot-rolled coil, hot-rolled sheet, cold-rolled sheet, steel pricing, U.S. steel mills, steel service centers SteelBenchmarker

NEW YORK — Upward pricing in the domestic flat-rolled steel market appears to have stalled, stirring speculation that a third round of price increase announcements is on its way, market sources told AMM.

"How do you keep the momentum going?" a source at one southern distributor said. "It swung in (the mills’) favor, but this thing is so fragile."

Multiple mill sources confirmed to AMM talk of a third round of price increase announcements. "A price announcement should come soon," one mill source said Wednesday.

But the exact timing of any potential increase is still unclear. Some buyers said the expected increase would not be announced until the last few mills close their December order books, which could happen as early as the end of this week or early the next.

Others said the timing of a sheet price increase likely will hinge on possible movement in the ferrous scrap market in coming days. If scrap prices rise, steel mills will have an impetus to raise finished steel prices, sources said. But as early indications suggest the scrap market may be poised to move sideways rather than up (, Nov. 28), that expected timeline for steel price announcements may be extended, they said.

"I do think we’ll see (an increase)," one Midwest distributor source said. "But I don’t know that it’s imminent."

Meanwhile, a sideways-to-down scrap market in December could serve to erode steel pricing support. "Early indications were that scrap would be up, but now that’s faded. That obviously doesn’t support an increase," a second Midwest service center source said.

At the same time, any move to increase prices on flat-rolled steel ahead of the December scrap market settlement could encourage scrap brokers to raise prices and in turn force input costs for mini-mills higher, a second mill source said. Such a dynamic would "force the other mills to support the increase you announce."

Still, many market sources agreed that the question is if, not when, domestic mills will introduce a third fourth-quarter price increase.

"If you look at the results of the mills, they’re horrible," the second mill source said, noting that steelmakers are looking to boost their profit margins.

Market sources have told AMM that a portion of the combined $90-per-ton increases already announced in October and November have been collected, but upward momentum has stalled as spot buyers see little need to order ahead of their January needs, especially since some domestic mills still have room in their December order books.

"Every ounce of me thinks things are flat," the second Midwest service center source said.

SteelBenchmarker’s Nov. 26 report, released Wednesday, pegged U.S. hot-rolled band at $693 per tonne ($628 per net ton), up 1.9 percent from $680 per tonne ($617 per net ton) two weeks earlier but still well below the prices mills have been targeting with the full $90-per-ton increase. Cold-rolled coil logged a similar increase, rising 1.6 percent over the past two weeks to $808 per tonne ($733 per net ton).

A price increase announcement could provide a boost to pricing as business often stagnates in the final weeks of the year, a third Midwest service center source said. "They’ll just keep trying to inch the floor up," he said.

"They’re just buying time to some degree, because they want to get into that January timeframe, when there’s a normal uptick in business and demand. They’re trying to hold the thing up until then," the second distributor source said.

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