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Imported flat-roll steel market less than rosy

Keywords: Tags  steel trader, importer, raw steel output, oversupply, steel buyers, flat-rolled, plate, cold-rolled Russia

NEW YORK — A weaker-than-expected outlook for the first quarter seems to be weighing down the imported flat-rolled steel sector, with traders and buyers reporting unchanged market conditions and little optimism on the first day back in the new year.

Traders and buyers had said in the final days of 2012 that they expected a pickup in import interest in January after a substantial second-half slowdown due to domestic oversupply and slack demand. But while some had hoped things would change in the new year, sources said Wednesday that initial optimism had somewhat waned.

"The incoming work right now seems very light. I’m not sure what to make of it and I don’t know when it’ll get better," said one buyer. "We’re just hanging around and everyone is keeping their inventories really low."

Stronger domestic steel production volumes could be one factor keeping buyers out of the imported steel market. Last week, U.S. raw steel output totaled 1.83 million net tons, according to data from the American Iron and Steel Institute, down 0.7 percent from the previous week but well above the fourth-quarter low of 1.68 million tons recorded in late October. That increase has kept the domestic steel market well-supplied, traders said, causing potential buyers to hesitate when it comes to purchases of foreign material.

"There has been no business in the last couple of weeks. No one wants to bother," said one trader. "The problem is that the production numbers are still high every week—we’re at 1.8 million tons per week of steelmaking."

As a result, hot-rolled sheet offers into the U.S. Gulf Coast have been scarce. A combination of lackluster demand in the U.S. market and higher prices from the Russian suspension agreement have caused sales to be insignificant, a second trader said.

"It’s been a bit quiet. No one woke up this morning and started calling me about imports," the second trader said Wednesday, noting that while typical first-quarter sales are usually stronger, that hasn’t been the case.

Other steel products, including cold-rolled and plate, have also seen interest taper off as a result of short domestic lead times and weak business conditions. In addition, prices for some Asian plate products are said to have increased by about $30 a ton, making the product less competitive for traders whose margins are becoming increasingly squeezed.

"The issue that’s upon us right now is, What are we going to do with these foreign offers?" the first buyer said. "Nothing is really attractive, especially with (late spring) arrivals, and why would I want to risk buying material if everyone believes that things (domestically) are at a standstill? We’re just going to keep buying what we need and not another extra pound."

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