CHICAGO Executives at Olympic Steel Inc. expect flat-rolled pricing to stay relatively flat this year, but they hope to counter that with higher inventory turns as volumes continue to rise due to improved demand and deeper market penetration.
The company forecasts scrap prices will rise in March, probably matching the level where they were in January after having retreated $9 to $10 in February, chief financial officer Rick Marabito said during the distributor and processors Feb. 21 earnings call.
"We see flat prices for the year, and were just in that flat-priced mode right now, so we dont see much deflection on the pricing in the first quarter," he said.
Nonetheless, Olympic has "reasons to be optimistic," president and chief operating officer David Wolfort said. "January marked a rebound in order activity, likely the result of some pent-up demand owing to the fourth-quarter downturn in volume and pricing," he said.
"We are encouraged by firmer pricing, which should help margins. Compounding the price effect is the fact that we have moved through much of our higher-priced inventory, thus lowering the average per-ton cost of current sales," he added.
Olympics expansion, coupled with better inventory management and "pricing disciplines for small and niche orders," will lead the companys financial performance to improve "in 2013 and beyond," Wolfort added.
"The financial health of our OEM (original equipment manufacturer) customers appears to be robust," Marabito noted.
Although the Bedford Heights, Ohio-based company saw OEM orders and shipments stall in October, "we have seen that come back in January," Wolfort said.
"Its not an even flow; there are surges in the marketplace," Wolfort said. "But the tonnage has repaired itself, and we look to 2013 for some nominal growth in terms of market share as we bring on new facilities and as our OEM customers (consume steel) at a pretty even pace throughout the year."