PALM DESERT, Calif. Steel
distributors continue to see stagnant pricing despite
mills persistent attempts to raise prices, although some
key areassuch as automotiveare showing signs of
"Theres just not a lot of
upside (pricing) potential in the market," Jim Barnett,
president and chief executive officer of Grand Steel Products
Inc., Wixom, Mich., said on the sidelines of the Association of
Steel Distributors 2013 annual convention in Palm
Nearly $200 in flat-rolled hikes
have been announced over the past five months, Barnett noted.
But while prices might rise briefly following an announcement,
the market eventually "seeks its own level," making any
improvement temporary, he said. "I dont think the actual
amount of the transaction price has increased more than $40 per
ton (over this period)."
An unusually large amount of
business seems to be between distributors, suggesting a
reluctance to commit beyond the spot market, other sources
"Its really an indecisive
marketplace," Gregg Gross, president of Northshore Metals Inc.,
Deerfield, Ill., said, noting that the steel markets
"hesitation factor" is in line with most Americans
cautious economic attitudes today.
With memories of the recession
still fresh, Voss Industries, a Taylor, Mich.-based flat-rolled
processor that does 80 percent of its business in
automotive-related work, has continued to sit on some capital
"All of us learned from 2008 and
2009," president Paul Michael Voss said, noting that his
company is debt free. "Were taking it day by day and
running our place as efficiently and effectively as we can.
Were not going to pull the trigger on (projects) that
take on debt."
Still, despite this caution,
distributors arent willing to relinquish their roles.
"I dont mind a slightly
larger inventory," Brian D. Robbins, chief executive officer of
MidWest Materials Inc., Perry, Ohio, said.
Robbins company is
stocking about three months of material in its warehouses vs. a
service center industry average that he estimates at two to
two-and-a-half months. "At the end of the day, were a
distributor of steel goods, and we want to have the goods to
distribute," he said.
Moreover, some key markets are
Tim Berra, president of Toledo,
Ohio-based flat-rolled distributor Heidtman Steel Products
Inc., has a "very optimistic" outlook due to auto sector
trends. Auto output is expected to build through the year,
partly due to consumers needs to replace aging vehicles
and greater demand for fuel efficiency.
Rail cars are another source of
healthy demand, distributor, mill and securities analyst
sources said. This has largely been driven by strong energy
industry requirements for tank cars.
Capital equipment is currently
stronger than consumer goods, James P. Bouchard, chairman and
chief executive officer of Sewickley, Pa.-based Esmark Inc.,
Plate fabrication, in
particular, is up, with Dallas-based Trinity Industries Inc.
and other rail car manufacturers "doing great," he said.