NEW YORK Flat-rolled steel prices have continued to weaken as a result of lackluster demand and are likely to continue to soften in the next week, according to domestic buyers, but they believe the bottom may be within sight and expect an uptick in the near term.
Market participants have confirmed in recent weeks that steel pricing has started to erode amid short mill lead times and a slow recovery in steel demand (amm.com, Jan. 9).
"I think prices have softened recently, but I think that trend will be short-lived," one buyer said. "We may be at the end of it. My personal view is that things should turn around and head back up, but in a very slow and gradual way.
"Business is funny right now," a second buyer said. "My sense is that people that still have inventory are trying to play the waiting game ... (and) wait another week to see if the pricing will come off."
Buyers contacted by AMM this week said they have received multiple calls from domestic mill sales representatives eager for new orders. With a lull in the market, however, buyers are only willing to purchase what is absolutely necessary.
"Were getting lots of calls (from the mills). There are a couple of mills that are really hungry," the first buyer said. "However, demand is just steady compared to the last few months. Nothing is taking off or improving. Its not greatly declining, either. I think everyone is just in status quo and holding on to what they have."
Rumors of price increases have been circulating since the start of the year, but market sources said that a price increase would be difficult to pull off.
"There are rumors of price increases, and at the same time all the prices are going down. Who do you believe? Everyone is a nice person at some point, but the answer is, I dont know," a third buyer said. "I think that there has to be a bottom shortly."
Michelle Applebaum, managing partner at Chicago-based Steel Market Intelligence, said in a research note this week that domestic sheet price hikes are likely in the aftermath of the fiscal cliff resolution as well as the holiday-related lull. "With domestic prices at a normal equilibrium relative to soon-to-be-rising foreign prices, the likelihood is strong that we will see further sheet price hikes shortly," she said.
But with short lead times and lackluster demand, a price increase attempt likely would be ineffective, a third buyer said. "Most of the optimism is all in conversation. The hardcore fact is things are lousy. I think wed be very, very fortunate if things turn around before the end of the second quarter."
Buyers believe the future may be a waiting game. "People arent thinking about buying steel right now. I think that mindset will change in the next couple of weeks," a fourth buyer said. "The mills are patiently waiting on the sidelines, and were also in a wait-and-see kind of approach."
SteelBenchmarkers latest report, released Jan. 16, pegged U.S. hot-rolled band at $689 per tonne ($625 per net ton), down 1.9 percent from $702 per tonne ($636 per net ton) three weeks earlier, while cold-rolled was put at $805 per tonne ($730 per net ton), down 1.1 percent from $814 per tonne ($738 per net ton) in the same comparison.