CHICAGO December has
shaped into a rather grim month for buyers and sellers of
special bar quality (SBQ) products, with grave uncertainties
leading market participants to stand pat on their inventories
and resist taking deliveries before the first of the year.
"There is more than the usual
year-end effect," a Chicago-area cold-finished bar processor
told AMM Thursday.
Market participants "are seeing
little confidence," even though first-quarter bookings are
typically quite strong.
He attributed this to
"trepidation over the macro issues, (namely) a lack of
leadership in Washington. ... There is an economy out there
waiting to rebound, but the leadership has gotten in the
Cold drawers, distributors and
end-users all say that prices havent budged in the past
six weeks. And although some players suggest that producers
experiencing low capacity utilization rates and shortened lead
times might offer discounts to a handful of large-volume
buyers, theres no direct evidence that such transactions
are being consummated.
"Everything is at a standstill.
We are waiting for the government to do something," according
to an East Coast distributor, who also reported that prices
"People are livid; they are
upset," one lower Great Lakes distributor said. "Theyre
doing nothing. There is definitely a downturn right now."
During the first half of the
year, the distributor was taking in 25 truckloads a month. Now
hes down to eight. "We are living off inventory," he
said, noting that he expects prices to decline, at least at the
"Our competitors are starting to
drop the number. ... My outlook for first quarter is:
Yuck, " he added.
"We told purchasing to bring in
the bare minimum of material. Mills are willing to hold
shipments until after the first of the year," the East Coast
"Nothing has changed. I wish
there was a pricing issue," a multi-location cold finisher
said. "Activity is really slow. Nobody is buying a lot."
The cold finisher was among
those who said that certain bar distributors are selling at
"People are trying to get
dollars in the door," another said.
A master distributor said that
he believes the current demand slowdown will last well into
2013. "We will have to hunker down and be prepared for a tough
first half. Customers are ordering onesies and twosies or
nothing," he said, adding that they have held off on solid
Two sources, both serving the
auto industry, were more positive.
However, a manufacturer of
automotive aftermarket products admitted that pricing in his
hot-rolled bar supply contract for 2013 is 6 percent lower than
that of 2012.
"Business is sort of good. We
are enjoying optimistic times with the auto industry, which
should continue into next year," a Detroit-area bar processor
and distributor said. "(Next year) will be as good as this
year, but we have to work harder to achieve it."