NEW YORK U.S. steel sheet prices look stable this week, although players are mixed about the direction of a market plagued by short lead times and oversupply.
"I know the mills were talking firm on the increases, but they came to me late last week and had more of a what do you need kind of tone again," one Midwest buyer said. "Im not sure if the price increases are standing. Theyre trying, but the market is soft."
Recently slated $50-per-ton increases havent translated into transaction price hikes in that amount, mill and buyer sources said, but they have eliminated many of the barrel-scraping discounts seen in the days leading up to the move (amm.com, March 7).
Many attributed the absence of a real pricing upswing to the lack of a seasonal uptick since the start of the year. Nucor Corp., Charlotte, N.C., said March 14 that first-quarter earnings look depressed after failing to see an anticipated pickup (amm.com, March 14).
"I think the reality is that user demand is just not robust. The first two, two-and-a-half months of this year were less busy than the same period last year for me," a second Midwest buyer said. "For me, thats a bellwether of whats going on in the marketplace."
Hot-rolled sheet held steady at $31 per hundredweight ($620 per ton), sources said, with most deals done at $30.50 to $31 per cwt. Others said prices below $30 per cwt were unseen.
Relatively high raw steel output continues to depress tags, market players said. U.S. raw steel output totaled nearly 1.83 million net tons last week (amm.com, March 12).
"Its a little starch in the laundry," the first buyer said. "Theres still too many people chasing too little business. At the end of the day, its about supply and demand. The mills can talk about cost and what their costs are, but the conversations are moot. If you can buy tons at mill A lower than at mill B, nothing else matters."
Business, while lackluster, has remained stable, and lead times remain in a range of two to three weeks.
"I think the mills are up. Id say maybe half of the increase has stuck, but lead times have not extended at all. People are buying very small orders and buying what they need," a third Midwest buyer said.
While there was some chatter in the market this week about the potential for another price hike, some said there might not be enough strength for one in the near term.
"Lead times are short, and that has people worried about making another price increase. I havent heard of anything yet," a fourth Midwest buyer said. "On the demand side, were doing fine. Am I optimistic about prices? My head is in the sand and I cant get my arms around it."
Looking forward, though, some sources are wary that the stability in prices could be short-lived.
"Fundamentally, the only thing thats changed is the scrap number. Lead times havent pushed out. The supply vs. demand problem is preventing the increase," a fifth Midwest buyer said. "Theres not a real bright future for the increase. They (the mills) have their backs against the wall on scrap input costs, so they have to be strong and hold."