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SBQ import offers persist in slow market

Keywords: Tags  special bar quality, SBQ, hot-rolled, cold-finished, import competition, price discounts, Corinna Petry

CHICAGO — Import offers continue to reach domestic buyers of special bar quality (SBQ) products despite lackluster demand.

"Some importers are back making offers, including those with large-diameter bar, but the demand for that is gone," a source at one upper Great Lakes bar distributor said. "It’s amazing how fast it has turned."

The distributor was among a handful of SBQ market participants who surmised that offers are being made on material that came in last year but has been sitting unsold at ports on the Gulf of Mexico.

"That whole Houston market has been flooded for a while with imports, six-inch (diameter) and up," a Midwest cold drawer source said. However, on "some of the commodity products we sell, we don’t get much pressure from imports."

Other U.S. players are finding imports of value. "We do buy import material on carbon bar," a source at an East Coast bar processor said. "We are going more and more to imports from Italy and Spain. Prices are very good and we have no complaints on quality."

Pricing for Italian bar is about 5 or 6 cents per pound lower than domestic bar, which is equal to a $100- to $120-per-ton discount, he said. "Domestic sourcing is still 70 percent of our purchase, but that’s mainly because of the lead times. Containers take eight to 10 weeks. But from Canada or Chicago, it’s two to three days."

An eastern Great Lakes buyer said he has peers purchasing bar from Italy and Germany. "But we are not competing head to head with (product from) China or India," he said, adding that he is buying steel from Canada, which he considers domestic supply.

Even if the bar is low-priced, there are other factors to consider. "On some stuff we import, we are seeing the freight prices almost double due to fuel and energy costs going up," a Midwest cold finisher source said. "On expensive products that is not a large percentage, but that might have an impact on (the total cost of) low-carbon hot-rolled bar."

Hot-rolled bar import license applications totaled 88,332 tonnes in February, down 29.4 percent from 125,179 tonnes in January. License data showed importers expected to bring in 15,885 tonnes of cold-finished products last month, down 7 percent from 17,084 tonnes in January.

Imports of hot-rolled carbon and alloy bar totaled 1,368,339 tonnes last year, up 17.2 percent from 1,167,904 tons in 2011, according to Commerce Department data, while cold-finished carbon and alloy bar imports slipped 0.3 percent to 251,076 tonnes.

The value of hot-rolled bar imports averaged $1,096 per tonne last year, down 7.5 percent from $1,185 in 2011, while the average value of cold-finished bar imports rose 1.2 percent to $1,789 per tonne in the same comparison.

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