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
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
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
"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
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."
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