CHICAGO Sentiment among
steel buyers improved in January, even as lead times remained
short and some would-be buyers continued to sit out amid
plentiful inventory levels and some lingering uncertainty.
Of the Steel Buyers Forum
members surveyed in January, 36.4 percent predicted their
incoming orders would rise in the next three months, up from
27.3 percent in December, according to data from the Institute
for Supply Management (ISM). Januarys response rate
marked the first time since April 2012 that no respondents
forecast a drop in incoming orders during the next three
months, ISM data show.
Meanwhile, 36.4 percent of
respondents said shipping levels in January were up compared
with three months earlier, double the 18.2 percent who said the
same thing in December, while those reporting a reduction in
shipments vs. three months earlier fell to 18.2 percent from
63.6 percent the previous month.
"We are not buying much but we
did have a very good January. This one was extraordinarily
good. I dont know what to make of it," a Mississippi
Valley processor said.
The slight pickup in market
sentiment comes as some flat-rolled steel mills are pushing for
a $2 to $2.50 per hundredweight ($40 to $50 per ton) increase
in sheet prices (
amm.com, Jan. 24). According to buyer sources, the
announced sheet increases are gaining a little traction even
though lead times remain short.
The producers are "doing their
best to push price increases through, but its been slow
in developing," one southern buyer said, attributing any
inability to capture the full increase to the fact that "there
is an awful lot of capacity."
As a result, mill books are
still "not where they want them to be," he said.
Of the $40 to $50 per ton more
the producers are asking for, "they are definitely not at $40
and probably in the $20 to $30 range," he added.
"The mills operating rates
are a touch better, but they are skittish," a buyer with
multiple locations in the South agreed.
And while many buyers report a
modest increase in shipments compared with late last year, most
say they are still keeping their inventories close to the
"We are living up to our mill
commitments, but we are not buying speculative tonnage," one
Midwest distributor said.
"We havent bought anything
since the most recent price increases, but we bought heavy in
November and December. Were using that steel to take care
of customer needs for the first quarter," the processor
Some steel buyers are also
waiting for the February scrap market to settle before making
their next round of buys, sources said.
"If it settles higher, we would
probably buy a little extra (steel)," the second southern buyer
Buyers are also watching out for
a possible roadblock in Washington.
"We see a bump in the road with
the debt ceiling debate in three weeks, which could temporarily
unnerve the market," a Midwest steel converter said.
However, if either consumer
spending or exports rise, "we expect the second half will be
stronger than the first," he added.