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Hot-rolled band prices said on downward drift

Keywords: Tags  hot-rolled band, Steel Benchmarker price, market commentary, lead times, demand, supply

CHICAGO — Hot-rolled steel sheet prices continue to face an incremental "drift" downward amid aggressive sales tactics and short lead times, market sources told AMM.

"Producers are in trouble—there is no lead time. We can get steel in five to seven days in some cases, depending on the mill," an eastern Great Lakes service center operator said.

A southern sheet distributor agreed, citing especially short lead times at a handful of mini-mills. "That’s one of the main factors affecting prices," he said. "(Plus), scrap (prices) pulled back, demand isn’t improving any and there’s oversupply."

"There is no sense of urgency driving people to make immediate purchases. I would characterize prices as drifting downward," he added. "It’s possible they haven’t reached bottom yet."

Last week, buyer and mill sources told AMM spot prices have essentially returned to where they were before the last round of mill-announced hikes of between $90 and $100 per ton—only a small portion of which stuck in the immediate weeks after the announcements—putting current prices in the low $600-a-ton range (, April 4).

"Everybody knew the price announcements were bogus. There wasn’t even a two- or three-day fear-buying cycle. You usually get a week or two of (prices) rising somewhat after a published increase," a Chicago-area coil buyer said, noting that prices are now "lower than (before) the last price increase."

SteelBenchmarker’s latest report, released April 10, confirmed the lower pricing trend, with hot-rolled band prices falling to $673 per tonne ($611 per ton) this week, down 0.7 percent from $678 per tonne ($615 per ton) two weeks ago. The SteelBenchmarker price for cold-rolled coil was flat at $784 per ton ($712 per ton).

The slipping hot-rolled band prices follow a disappointing first quarter in terms of sales, the Chicago-area coil buyer said. "Stagnation is what we see today," he said.

The Chicago buyer reported obtaining a quote this week of $615 to $620 per ton for delivery in May, but said if he wants up to 500 tons of steel before month-end, he can get it for $610. "They are rolling steel to keep the mills running," he said.

Others have reported more discounting still. "There is no honor amongst thieves. Mills are starting to go directly to end-users around service centers," the Eastern Great Lakes service center operator said. "They are cutting their own throats at well under $600. If you have an order of substance, prime can be had at $580 and below."

"Service centers are praying to sell what they’ve got," he added. "They cannot even buy their way out. It’s brutal. How long can the smoke-and-mirrors game be played?"

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