CHICAGO Citing lackluster
year-end demand and weak pricingdespite some attempts to
move tags highermost steel buyers are avoiding any
speculative purchases as they wait to see what 2013 will
"My inventories are higher than
normal, so I am being very selective as to what Im
buying," one Chicago-area carbon sheet buyer said. "I took
advantage of one small deal offered to me, but Im not
buying on spec as much as on what I must have."
The materials manager for a
Great Lakes defense and mining equipment-maker agreed.
"Were buying for projects, but were not stocking in
advance," she said. "Our volume has been a little less (this
quarter), but still steady."
The latest Institute for Supply
Managements Steel Buyers Forum survey confirms the
cautious trend. For the second month in a row, not a single
surveyed member said his or her company expects to boost
inventory over the next six months.
Steel buyers are also somewhat
bearish on the demand side. Compared to October, more
respondents said in November that incoming orders will decline
in the next three months (27.3 percent in November vs. 18.2
percent in October) and more predicted declining backlogs (36.4
percent vs. 27.3 percent). Nearly half (45.5 percent) deemed
their inventory levels "too high" against demand, up from 27.3
percent who claimed their stocks were too high in October.
"I was on the phone yesterday
with customers, and they were doom and gloom," a sales and
purchasing executive for a Chicago-area service center
Steel buyers caution comes
at a time when "pricing has hit a wall," the Chicago sheet
buyer said. "Unless we see an improvement in the economy, I
doubt prices will move up."
Domestic hot-rolled sheet prices
have stalled out at about $32.25 per cwt ($645 per ton) f.o.b.
mill after two rounds of fall price hikes, although sources
predict a softening may be in the cards.
"We had hoped the price increases would hold firm, but we
havent seen it. There is so much cheap product (both
domestic and import) in the market right now," the sales and
purchasing executive for the Chicago-area service center
But there are still pockets of
strength for steel distributors, sources said. A Midwest
coated-sheet distributor, for example, said his firm has not
experienced a slowdown.
"We are as busy as the devil. We are heavily into
automotive, and housing is picking up, so volume is going to be
good in 2013," he said.