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‘Hungry’ mills cut deals as sheet demand stalls

Keywords: Tags  steel prices, SteelBenchmarker, steel buyers


NEW YORK — The domestic steel sheet market appears to be dragging its feet this week as buyers report that much of the momentum gained during the latest round of price hikes is effectively gone.

"I think the sad truth is that the number never really got where we thought it was. Whatever momentum (was) generated from the last round of hikes has effectively lost its steam. I think ... it fell a little short," said one Midwest sheet buyer. "Demand with our customers—the end-users—is still relatively soft. Overall, our customer demand is weakening and volumes aren’t spectacular.

In January, after average prices fell to around $31 per hundredweight ($620 per ton) f.o.b. Midwest mill and as low as $29 per cwt ($580 per ton) for some large-volume buyers, a number of mills put out a round of $40- to $50-per-ton hikes, led by West Chester, Ohio-based AK Steel Corp. (amm.com, Jan. 24). The increases succeeded in part, reversing the trend of falling prices, but most market players said the average selling price only ended up rising about 50 cents per cwt ($10 per ton) to around $31.50 per cwt ($630 per ton) in the weeks since.

This week, however, buyers started to report lower-priced deals again, with the few transactions reported to AMM this week cited at around $31 per cwt or lower.

Buyers said that market conditions remain steady but fairly lackluster, with discounts possible for slightly larger tonnages with minimal negotiation—a sign that some domestic mills could be hungry for business.

"I don’t see the sky falling, but the mills never got the full increase," said a second Midwest buyer. "We’re seeing things very steady right now. There are a couple of mills that are desperate and creating problems in the market, though."

The question now is whether domestic sheet prices will face further downward pressure, particularly as some end-use customers remain hesitant.

"Our overall customer demand is weakening," the first buyer said. "I’m optimistic things will get better. But right now, the feeling is that things are softening."

Others added that steel mill utilization rates continue to be high, creating oversupply in the market. U.S. raw steel output totaled some 1.82 million net tons last week, up 1.2 percent from the previous week, while the average capability utilization rate increased to 76.1 percent from 75.2 percent the week before.

"(The mills) need to scale back. Maybe that’s why the price is so temperamental," a northern buyer added.

However, others said the spring is usually a better period for manufacturing, which could mean a seasonal boost in the near term.

SteelBenchmarker’s latest report, released Feb. 13, pegged U.S. hot-rolled band at $696 per tonne ($631 per ton), up 1.2 percent from $688 per tonne two weeks earlier. Cold-rolled coil was at $801 per tonne ($727 per ton), up 0.6 percent in the same comparison.


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