NEW YORK — Domestic flat-rolled steel pricing has started to erode amid short mill lead times and a slow recovery in steel demand so far in 2013, steel buyers told AMM.

Service center sources said they expect the slide to be short-lived as post-holiday demand improves and pushes out lead times, but until that happens, there has been little to keep stagnated prices from deteriorating, steel buyers said.

Spot buyers said that while lead times from many mills remain average, some are as short as one to two weeks for hot-rolled sheet.
“Based on that, it’s hard for pricing to go up,” one Midwest service center source said.

Readily available steel means many distributors see little reason to stock up. “There’s no real need to buy anything more than next week’s worth of steel if lead times are so short,” one Southern distributor said.

Many buyers said they are continuing to be cautious in their purchasing.

“We’re in a holding pattern. We’re waiting to see what happens with mill lead times,” the Midwest distributor said.

The price of hot-rolled steel sheet had been hovering at about $32 per hundredweight ($640 per ton) from December into the opening of business in the new year, but by midday Wednesday, service centers were reporting trades as low as $31 per cwt ($620 per ton).

While many buyers reported as-needed purchasing for specific projects, some said they were considering shopping for larger restocking buys.

“Everybody is being dragged down by a slow order book and capacity vs. demand,” a second Midwest service center source said. Meanwhile, some distributors said that they have seen a slow improvement in demand coming out of the holidays.

“We saw some pent-up demand early this week,” a second Southern distributor said.

An eventual recovery in demand could force more spot buyers back into the market, sources said.

“Given today’s business, (the mills) need orders,” the second Midwest distributor said. “They’ll get some now that they’re being forced to reduce prices.”