CHICAGO Demand for hot-rolled band may appear weak at
first glance, but spot prices for coil appeared to be holding
steady in the first week of the year.
Its hard to describe: The market isnt strong,
but its not weak either, a buyer in the Plains
states said. There is no urgency to buy. Customers are
waiting to see how their business shapes up. Although the
government has dealt with the tax issues, until economic
certainty arrives, they are being cautious.
According to the Institute for Supply Managements latest
Steel Buyers Forum survey, consumers generally boosted their
tons on hand last month, and while the proportion of those
deeming their steel stocks too high for current demand fell
from November, more than half (54.5 percent) said that they
plan to reduce inventory over the next six months.
People seemed stuck and didnt want to buy anything
(last month), the operator of a Mississippi Valley coil
processor said Friday. We covered our orders and sat on
our hands. This week, all of our inside sales representatives
are as busy as can be. We are in restart mode. (Customers) let
product run down, but we do have to get back to business.
Spot pricing is laying flat at $640 per ton, he
said. We are putting in small-quantity orders to the
millsnothing large, 100 tons to 200 tons here or
An East Coast buyer agreed that spot quotes ranged from $640 to
$650 but was told that minimum volume would be 500 tons per
order. Prices are holding, he said, because customers trimmed
their inventories in December.
Had there been a longshoremans strike, that would
have been a problem. Our order books are strong. Everyone is
basically optimistic. Business is there, he said.
If scrap went down $50, that would create a ripple
effect, keeping customers on the fence. But that hasnt
happened, so I see the market as stable for the next 30
A Southern steel buyer reported that several manufacturing
customers have placed orders through first quarter and that
demand from coastal energy businesses is also good. Our
OEM (original equipment manufacturer) customers try to keep
their inventory at two to three weeks, which is good for the
service centers, he noted.
The Southern buyer believes that steel pricing will stay firm
for the first quarter and then struggle for the rest of the
year, in part because we are still struggling with
overcapacity, he said.