CHICAGO Steel buyers have
become more wary and cautious in recent weeks than they had
been during much of the first quarter, particularly when it
comes to building inventories, an industry survey shows.
Nearly 55 percent of steel
purchasing managers surveyed by the Institute for Supply
Managements (ISMs) Steel Buyers Forum in March said
their inventories were too high compared with demand, up from
50 percent who thought their stocks were too high in February
and just 36.4 percent who deemed their inventories too large in
the first month of the year. No respondents said their
inventory levels were too low when surveyed in March, unlike
the 7.1 percent who found themselves short material the
Similarly, no steel buyers said
they plan to increase stocks in the next six months, down from
the 14.3 percent of respondents who said they planned to boost
stock levels when surveyed in February, the data show.
Meanwhile, fewer buyers in March forecast an increase in orders
and backlogs over the next three months, according to the
Steel buyers hesitancy to
stock up coincides with falling sheet prices and short lead
times. This past week, AMMs hot-rolled band
price slipped to an average of $600 per ton ($30 per
hundredweight) f.o.b. Midwest mill from $610 per ton ($30.50
per cwt) a week earlier (
amm.com, April 4), even as the stronger plate
market bucks the trend (
amm.com, April 5).
The sheet market weakness has
dampened activity, and purchasers say they arent racing
to stock up on metaleven if some mills are said to be
hungry for orders.
"The mills are desperate. They
need orders," a Mississippi Valley flat-rolled processor told
AMM Friday. "We put in an order yesterday. They are
going to melt it and roll it on the weekend. And it was only
Other buyers agreed, pegging
spot prices at $600 to $605 per ton, and sometimes lower.
"The mills are quite aggressive
to get orders. ... (Spot) prices are in the low-$30s (per cwt)
for prime, but you can make deals. You can get anything you
want within two to three weeks," an East Coast steel buyer
"We have got offers to buy
(carbon sheet) below spot market prices," a Midwest-based
national distributor confirmed. "I think the mills are getting
desperate. Demand is so-so and they cannot get any traction
with respect to price increases. They plateaued."
Sheet buyers across the East
Coast, Midwest and Mississippi Valley all said they arent
pulling in more material than they whats needed to
"Everybody is fighting for the
same business. There is too much production capacity, too much
inventory and people dont want to get caught with
high-cost inventories," the East Coast buyer said, calling the
market "eerie" and a "ghost town."