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Caution rules steel demand outlook for ’13

Keywords: Tags  Steel market outlook, service centers, stamper, metalformer, steel pricing, end use demand, agriculture, construction equipment heavy truck

CHICAGO — Steel consumers—from service centers to stampers to manufacturers—are offering a mixed view of demand for early 2013.

The outlook is positive among steel-consuming companies in the auto sector, but less so for those supplying small and midsize general manufacturing businesses, according to sources. Demand for mining, energy and agricultural equipment might level off, but it should rise for construction equipment as housing starts and home sales finally begin to improve.

Long-term pricing forecasts both for long and flat steel products are clear as mud, with buyers suggesting that any monthly increases won’t hold very long unless demand gains ground.

"We see hot-rolled coil pricing staying in the $640- to $660(-per ton) range and not going up," one distribution network executive said, largely because service center inventories remain long. "It’s rare to see prices fall in the first quarter, so we would assume pricing will be stable or up slightly. But by April or May, we are not sure." In terms of demand, "some areas are a little better, like western Canada, and our automotive numbers are holding up well."

A source at a Chicago-area coil processor hasn’t yet found a bright spot. "Forecasting for January looks dismal. Customers expect greater than a 10-percent decrease from 2012," he said.

An Indiana steel distributor source said he’s building a little backlog for January and he expects forecasts to clear up if federal budget issues are resolved.

"Construction has finally gotten off the basement floor," said a Detroit-area service center operator, who also described January bookings as solid.

A source at a western Ohio distributor said agricultural and ranching equipment demand "has been holding up pretty well," but "general industrial has very low demand."

On the long product side, "we are seeing little confidence in the market," a Midwest cold finisher source told AMM. "First-quarter bookings are not as strong as in past years."

A northern Ohio bar processor agreed. "There is definitely a downturn right now, but it’s nothing we haven’t seen before. Imports offer more competition and are draining from domestic tons," he said.

Customers of one East Coast bar supplier have been holding off on placing orders until January, but a manufacturer of products that use engineered bar sees bullish outlooks from automotive and medical equipment clients.

A source at a manufacturer of heavy equipment for defense and mining applications has continued buying for current projects but isn’t anticipating any rise in volume in 2013.

"Our mining customers, with coal being unpopular these days, are not optimistic," an executive at a Great Lakes bar distributor said.

A source at a Mid-Atlantic master distributor agreed. "Mining seems to have slowed. Ag(riculture) equipment and heavy truck are going to be very weak in the first half. The forgings market is weak as well."

But not everyone’s forecast was downbeat. A stamper, a metalformer and a fastener manufacturer each said they’ve won new business that will keep their machines running throughout 2013.

"We have good things happening at the behest of contract manufacturers in the auto industry and others," the stamper said. "The trend across the world is down, especially in Europe," but "we are hoping to hold it together."

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