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Flat-rolled steel orders tepid, distributors say

Keywords: Tags  Metals Service Center Institute, MSCI, steel distributors, shipments, inventories, corinna petry


CHICAGO — It might be March Madness for college basketball but it’s proving to be more a month of malaise for steel distributors, who aren’t seeing much upward movement in demand or spot pricing despite recent price hike attempts.

"There is not a real strong pulse to the steel market," a source at an upper Great Lakes flat-rolled distributor told AMM. "February was steady year over year but our shipments will be down in March. That tells me demand is tepid."

Steel shipments by U.S. members of the Metals Service Center Institute (MSCI) averaged 168,400 tons per day last month, a scant 1.7 percent ahead of 165,600 tons in January but down 3.3 percent from 174,100 tons per day in February last year. Steel shipments by Canadian service centers averaged 23,200 tons per day in February, down 2.1 percent from 23,700 tons the previous month and 10.1 percent lower than 25,800 tons per day a year earlier.

U.S. distributors shipped 3.37 million tons of steel last month, down 7.9 percent from 3.66 million tons in February last year, and Canadian service centers’ shipments fell 14.5 percent to 463,100 tons from 541,500 tons in the same comparison, according to MSCI data.

"February for us was down 20 percent from last year. Also, on a per-day shipping basis we were down from January," a source at a Midwest sheet distributor said.

And March isn’t looking any better, some steel market sources said.

"We’re not getting any pull-aheads (in orders). We’re not even getting requests for quotes for the second quarter yet, which is surprising since we’re almost there," the Great Lakes distributor source said. "Our customers are not feeling the love that these steel mill increases will stick, regardless of what scrap is doing."

Domestic sheet mills late last month announced price increases of $50 per ton ($2.50 per hundredweight), the second sheet price hike announcement since the start of the year (amm.com, Feb. 27). Most mills and buyers told AMM late last week that spot transactions were still taking place at between $600 and $620 per ton ($30 to $31 per cwt) f.o.b. mill (amm.com, March 14), but the announced increases appear to have eliminated much of the major price discounting that was said to have been taking place in the weeks prior to the announcements.

"We get an announcement, the price goes up $10 to $15 for a week or two and then slides back down," the Midwest distributor source said. "We were at peak at the end of last week, settling at $620. The mills are trying to get to $650. I don’t see that happening. The reality is, there’s no reason it should stick. Lead times are very low."

A southern service center source agreed that mills haven’t got all they wanted. "We kind of felt the increase coming so I bought to cover myself. They took a buck and a quarter" per hundredweight increase, or $25 per ton, on his order for April delivery, he said, not the full $50 the mills had been targeting.

U.S. steel distributors’ inventories totaled 8.51 million tons, equivalent to 2.5 months’ supply, at the end of February, down 2.6 percent from 8.74 million tons (2.4 months’ supply) a month earlier and down 4.6 percent from 8.92 million tons (2.4 months’ supply) a year ago, MSCI data show.

Canadian service centers’ inventories totaled 1.77 million tons (3.8 months’ supply) at the end of last month, down marginally from the previous month but up 2.4 percent from 1.73 million tons (3.2 months’ supply) a year earlier.

"There is a continuing effort, particular among the big guys, to hold inventory at 60 days. There is always an inventory depletion plan in place," the Great Lakes distributor source said. "With mill lead times where they are, there is no need to stock up on steel in anticipation of prices going up."


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