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SBQ demand inches up; pricing plodding along

Keywords: Tags  special bar quality, SBQ, hot-rolled bar, cold-finished bar, pricing, mill lead times, demand, competition steel

CHICAGO — Special bar quality (SBQ) processors, cold drawers and distributors have seen an uptick in orders and shipments since the fourth quarter, although demand has softened considerably from the first quarter of last year.

"In January, we had more revenue than November and December combined," an Ohio Valley service center executive said.

Published base prices haven’t moved in months, and surcharges were flat as scrap went sideways from January to February. But the surcharge is poised to move lower next month, with one major mini-mill notifying customers of a $13.33 per ton reduction effective March 1 (,Feb. 15).

Spot prices for hot-rolled bar, 1000-series, 1-inch rounds have fallen to an average of $860 per ton in February, while those for cold-finished Grade 1018 rose slightly to $1,218 per ton. Buyers attributed the minute increase in cold-finished bar to longer processing times compared with hot-rolled lead times of three to six weeks.

Some cold finishers and processors said their backlogs are building and they are starting to place mill orders for second-quarter delivery. Distribution sources were less sure of the direction.

"January was pretty strong, and February is OK so far. Our backlog has improved, and we are on target for first quarter. But (supply chain) forecasts are not aggressive because we don’t know if it’s sustainable," one Mid-Atlantic cold drawer said.

"Business is flat. The activity is not there yet," a Midwest SBQ distributor said. "I don’t know if customers have the work. They are buying exactly what they need, and we are buying exactly the same."

A buyer in the Southeast saw February prices decline slightly for common hot-rolled grades, but noted having "bought a truckload today" because inventory had been getting low.

"We are creatures of habit. We want this year to be as busy as last year, but it has slowed down," a lower Great Lakes processor said. "Wondering what the government is going to do" has caused uncertainty.

There has been "very little movement on pricing, (as) lead times are way down and there is a lot of overstock at service centers," he said.

Customers are giving "ho-hum" forecasts, an Ohio reseller said. "My competitors are moaning about the same thing," the reseller said.

"People have trouble predicting yesterday," one Midwest distributor said, expressing little confidence about forecasting.

"We are plodding along," a national processor and distributor told AMM. "Nothing has changed from a pricing standpoint. Pricing is still difficult, while certain people have high inventories and are trading dollars."

Buyers in the Midwest and Southeast confirmed the practice.

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