NEW YORK A slowdown in business activity has sparked uncertainty over where flat-rolled prices will land when ordering resumes at the start of January, market players have told AMM.
Domestic mills have attempted to retrieve deals at prices as high as $34 per hundredweight ($680 per ton) for hot-rolled sheet in the past week, but amid limited transactions those levels were a long shot, steel buyers told AMM.
"Youve got the its-that-time-of-year factored into it. People are in holiday mode," one Midwest service center source said of the slow demand.
Concerns over variability in pricing have left many spot buyers saying they will wait until the new year to book the flat-rolled material they are currently negotiating.
"Im at the cliff and looking over it. Im just going to wait until January," one distributor in the North said.
That hesitation was reported by many steel buyers. Amid the slowness, lead times have remained contracted, which sources also noted last week (amm.com, Dec. 12).
"We were about to place an order on something we needed in the beginning of February. We thought we better do it now, just to be safe," a second Midwest distributor said. "They called back and asked if we could live with January delivery."
That slowness has left many sources noting the potential for price deterioration, with rumors of large orders being placed below an average price of $32 per cwt ($640 per ton) f.o.b. Midwest mill.
"It seems kind of obvious theres weakness in the marketplace, at least temporarily," the first Midwest service center source said.
While some mills were said to be holding the line on offers at $33.50 to $34 per cwt ($670 to $680 per ton), others were reportedly more flexible and willing to offer hot-rolled material as low as $31.50 per cwt ($630 per ton).
"Theres no way they would get it," a third Midwest distributor said of a $34-per-cwt quote he received for hot-rolled material.
Given the market variability and limited buying this past week, the average price of hot-rolled sheet remained $32 per cwt.
While service centers said they anticipate a pickup in order levels at the start of 2013, they fear prices will face downward pressure from ferrous scrap in January and lower-priced imports.
"The price of scrap doesnt seem to be moving up, capacity utilization remains lowtheres nothing to substantiate why pricing would rise rapidly," the distributor in the North said. "(Another) concern is April imports have been offered at lower levels. I know full well (thats) on the horizon, and its getting closer and closer."
Still, there is potential for a sudden protraction in lead times if service centers see a big pickup in January shipment levels amid low inventories. That could force mill prices up rapidly if spot buyers all return to replenish at the same time, other sources said.
"There still could be a bump (in prices) since people dont have a lot of inventory," the third Midwest distributor said.