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
customersthe end-usersis still relatively soft.
Overall, our customer demand is weakening and volumes
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
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
negotiationa sign that some domestic mills could be
hungry for business.
"I dont see the sky
falling, but the mills never got the full increase," said a
second Midwest buyer. "Were 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. "Im optimistic things
will get better. But right now, the feeling is that things are
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 thats 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.
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.