NEW YORK Participants in
the domestic and imported steel sheet markets are hoping that
the second quarter will fare better than the first, but most
agree that prices are unlikely to gain much upward momentum
unless capacity is taken offline.
"The big picture is that (prices
are) based on demand and supply, and the gap between the two is
too big," a Midwest service center source said. "Theres
too much supply availability and theres too much ability
to make new tons, which keeps lead times short and puts
pressure on prices."
A steel trader agreed, noting
that foreign sheet has continued to remain uncompetitive except
in major importing hubs due to continued oversupply. Some
domestic mills are matching import prices on the East Coast and
freight equalizing, some traders said, making it increasingly
difficult to sell foreign material into the U.S. market at a
"Things are about the same.
Theres just too much steel out there," one steel trader
said. "The supply-demand balance has been such a thin line, and
foreign pricing isnt all that good. There is no (foreign)
hot-rolled cheaper than what you could get from a domestic
mill. The U.S. prices are cheap. You just cant
Earlier in the first quarter,
sheet mills attempted to move prices up some $90 to $100 per
ton in an effort to stop price deterioration, with a portion of
those announced hikes holding and average prices rising to
about $630 per ton ($31.50 per hundredweight) f.o.b. Midwest
mill in early February.
But prices subsequently lost
speed, with average prices dropping to $610 per ton ($30.50 per
cwt) last week as market participants said momentum had
effectively disappeared, citing lower deals in the marketplace
and widespread discounting (
amm.com, March 21).
report, released March 27, also shows a recent softening, with
U.S. hot-rolled band prices down 0.9 percent to $678 per tonne
($615 per ton) from $684 per tonne ($620 per ton) two weeks
Certain mills have been
particularly hungry for business, sources said, with major
deals reported from a handful of suppliers throughout the
Midwest and Southeast.
"Not much has happened (this
week) other than my sense that things are sliding a bit," a
northern service center source said. "Were seeing a
slight bit of seasonal uptick right now, but its just not
typical. Its not seasonally normal; its below
"Every order is a good order for
a steel mill," he added. "Theres just too many people
facing too few orders in the whole supply chain. Its the
mills, the service centers, the tubersits
But while market participants
report too much supply to meet steady but not robust demand,
some short-term relief could be in sight. A number of domestic
mills are rumored to be planning spring outages, although
market sources said that meaningful supply taken offline would
require significant unplanned outages.
Meanwhile, earlier rumors of
another round of price increases appear to have fizzled for the
time being, given uncertainty in the market.
"There were rumors that mills
might come out with another run of increases, but it seems like
theyll hold off on that," a second Midwest service center
source said. "Things have been pretty steady, and demand has
been solid, but it isnt great. Margins are tight. And
things just keep bumping around in this short range of $30 to
$31 (per hundredweight)."