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SBQ prices hold flat amid uneven demand

Keywords: Tags  Special bar quality, pricing, demand, end-use sectors, hot-rolled, cold-finished, lead times, order books Grade 1018

CHICAGO — Demand for special bar quality (SBQ) products is lukewarm early in the new year, with pricing flat and unlikely to change through February, according to buyers and resellers.

"We had a horrible November and December, worse than seasonally slow levels," a sales executive for an Ohio Valley distributor said. "Then we saw a huge inflow of demand since the first of the year. We have seen lots of new orders and quoting activity. We are getting large orders on our books for the year and smaller orders for immediate needs. We don’t know if that will be sustained, but there is pent-up demand."

He said that even though the consensus is negative, "I am fairly optimistic. The phone is ringing, and sales are hitting their stride."

A source at a Great Lakes cold finisher said that demand varies widely from one end-use sector to another. "Depending on if you are automotive, heavy truck, agricultural equipment, each sector is very different. Some are crazy busy; some are off 20 to 30 percent (vs. a year ago)," he said. "It will feel like a flat year—not deeply south or deeply north. I’m hoping for at least 2012 (business levels)."

A second source in the region said he had talked to a lot of customers who "are still in the wait-and-see mode." Producers "would like to push prices up as they’re not happy with volume and earnings. But there isn’t enough demand to do it, and they have to wait for a true opportunity," he said.

"Scrap is flat, so pricing is holding firm," the Ohio Valley executive said, despite relatively short lead times—six weeks or even less for most commonly rolled grades and sizes, buyers told AMM.

"The mill order books have been wide open for the past three months," the Great Lakes cold finisher source said. "There is (plenty) of availability and quick turnaround—quicker than we have seen in the past two years." Nonetheless, he doesn’t expect a change in pricing. "Mills are targeting the places where they can go after tons and prioritizing their marketing," he said.

Hot-rolled 1-inch-round bar in the 1000 series remains in a narrow range just under $880 per ton, while cold-finished Grade 1018 bar in the same size is still below $1,220 per ton.

"As long as people are still cleaning up inventory (and filling in holes), I think all prices posted for January are pretty flat and will be sideways in February," the cold finisher source said.

Other sources agreed that SBQ pricing was unlikely to move very far in either direction over the next six weeks.

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