NEW YORK Steel sheet
prices continued to slide this week as domestic overcapacity
and widespread discounting more than offset continued stability
Although end-use demand remains
fairly steady, sources said there are still too many suppliers
chasing too few orders, and there appears to be little ahead
that will fundamentally correct that imbalance.
"I dont think there is
room (for mill prices) to fall, but I think they will anyway.
Were at the point that if one mill doesnt reduce
their price, another will," one Midwest service center source
said. "If we were desperate for steel, we would pay higher for
it. But we dont need it that desperately. The story is
getting old: demand is short and availability is long."
As a result, domestic hot-rolled
band prices inched down this week to an average of $600 per ton
($30 per hundredweight) f.o.b. Midwest mill from $610 per ton
($30.50 per cwt) last week, with some deals even being reported
around $580 per ton ($29 per cwt). Others noted that there
seems to be a slight squeeze on the traditional $100-per-ton
($5-per-cwt) differential between hot-rolled and cold-rolled
Sources pointed out that
continued short lead times of two to three weeks for hot band
remain an issue. With such short lead times, many service
centers are unwilling to place large-tonnage orders, since a
quick turnaround is still easy to come by.
"Business is tough right now.
There hasnt been much going on in the last couple of
weeks," one mill source said. "Were struggling to meet
our numbers. As long as lead times are short, theres no
reason for people to buy if they can go hand to mouth and buy
what they need."
Others agreed, adding that the
recent declining price trend is problematic for those holding
larger inventories. In addition, ferrous scrap prices appear to
be down about $20 per ton in most major regions in April, which
could translate to lower finished steel prices down the
"The problem is that no one is
investing in steel right now. You just cant buy steel
today with the confidence that its going to be worth more
tomorrow," a second Midwest service center source said.
"Everything is so flat (and) its the same story every
Despite the price erosion,
sources maintain that business conditions remain fairly stable,
even if activity and margins arent stellar. Some say that
demand on the end-user level remains good, especially with the
start of spring and an expected pickup in the construction and
"Weve actually seen orders
pick up slightly. Maybe its in relation to moving into a
new month ... or because of the seasonality construction," a
third Midwest service center source said. "Things look a little
busier this week, and were seeing an increase in spot
orders. But were not seeing any better pricing (from the