In the minds of many steel
traders, 2014--and not 2013--is the new target for an expected
turnaround in the market due to oversupply, uncertain pricing
and lackluster demand.
Early last year, a number of
market sources said 2013 looked like it would be a promising
prospect for a full recovery. But while the first half of 2012
looked strong for many domestic steelmakers, things slowed
considerably in the second half on falling demand and
The trading community has echoed
much of that sentiment. U.S. steel imports totaled some 2.9
million tonnes in AprilÑmost likely on orders placed in
the fourth quarter of 2011 and the early weeks of
2012Ñbut have fallen steadily ever since, with October
preliminary figures slipping to some 2.3 million tonnes,
according to U.S. Census Bureau data.
Im hopeful and
optimistic that things will pick up slightly in 2013, but we
may not see a true pickup for some time, one flat steel
trader told AMM.
Still, 2012 was a stronger year
than 2011. Steel imports totaled 23.3 million tonnes in the
first nine months of the year, 16.8 percent higher than in the
same period in 2011.
The slower-than-expected market
has affected shipments via Mobile, Ala., which traditionally
has been a major steel hub. The steel market seems to
have flattened with the selling prices going down,
Alabama State Port Authority chief executive officer James K.
Lyons said. We just dont see heavy construction
projects here, although automotive is good. Theres a lot
of fear in the marketplace, which is causing people to postpone
or forgo major capital projects, where a lot of steel
Much of what is imported depends
on Capitol Hill. According to policy and counsel sources, trade
actions were surprisingly slow in 2012 but some domestic
interests said a number of trade suits are brewing, including
potential complaints against wire rod, plate and oil country
tubular goods, which could affect imports.
In addition, many of the changes
following the 2012 elections are expected to spill into 2013 as
political pressure increases to hold China accountable for
alleged illegal trade practices. The domestic industry argues
that unfairly traded imports have hurt U.S. jobs, caused
production lines to move overseas and weakened the overall
On the flat-rolled side, in
particular, traders have said that while foreign pricing has
remained relatively steady, domestic prices have fluctuated,
causing fleeting moments when foreign products look competitive
and other moments when foreign products look overpriced.
Import pricing has been
sort of the same now for months. Whats changed is that
the domestic mills have gone up and down some $100 (per ton),
and you have wild gyrations overlaid by steady import pricing,
so sometimes business is good and sometimes its
bad, a second trader told AMM.
In addition, flat-rolled traders
complain that domestic mills arent disciplined enough to
keep capacity down in order to maintain higher prices. With the
lack of a steady spread between domestic and import prices, the
import market remains sluggish as would-be buyers are afraid of
taking the plunge on material with two- to three-month lead
But a lack of interest from
foreign mills in shipping to the U.S. market could pose another
problem. In late 2012, the hot-rolled steel suspension
agreement between the United States and Russia was amended,
pushing prices up some 47 percent, effectively taking Russian
hot-rolled coil out of the U.S. market. With a host of other
existing dumping duties on the product, there are few places
left from which traders can import.
On the other hand, the long
products sector--including wire rod and reinforcing bar--could
be strong in the first half of 2013, traders said. Wire rod
from China has been a major part of the U.S. market since April
2012 due to competitive pricing, and reinforcing bar from
Turkey showed strength early in the year.
well probably see the same kinds of numbers (in 2013
that) we saw this past year in the first few months, a
long products trader said. Traditionally, domestic prices
go up in the first two quarters, so thats when we make
most of our deals.
But overall, traders said that
even with depressed markets, the United States will always see
imported material, and 2013 will be no exception.
The U.S. market is still
the strongest market in the world. Look at China slowing, and
look at Europe demand falling apart. The import market in 2013
will be better than this past year, but we may not get a real
change in demand for a few years out, another trader