CHICAGO Demand for
special bar quality (SBQ) products has softened further over
the past two weeks, sources told AMM, and only a
portion of an announced April 1 price hike reportedly has taken
"It seems like April is very
soft," a source at a Midwest bar processor said. "We have a big
gap to fill for the month."
A northern Great Lakes cold
finisher source agreed that this months demand is far
from robust. "Lead times are six to eight weeks, or even less.
April orders are flat. The whole first quarter was flat," he
said. Compared with the tightness experienced last spring,
"cold processing is wide open now. There is a lot of
There are some bright spots,
like automotive, but other sectors are not holding up so well,
"There are customer sectors that
are off 10 to 20 percent," the cold finisher source said,
citing weakness in the heavy machinery, heavy truck and energy
equipment segments. "I dont know if the second half will
match the second half of 2012. Things are not as good in the
rest of the world outside automotive."
The buying that is taking place
tends to be small-volume and with the clear purpose of simply
refilling holes as drawers, distributors and end-users
arent taking any risks with inventory, sources said.
"There is a fair amount of
quoting activity, but order volume is quite low," said a
national SBQ distributor source based in the Southeast. "One of
my salesmen said, I never saw so many inquiries for such
low tonnage. He booked seven orders in one day but they
added up to less than a truckload."
The Midwest processor source
noted that adding tons to an order doesnt result in any
major price reduction so theres little impetus to stock
"Business for me is pretty bad.
Im done with my buying for at least three months unless
some spot buys come up," a source at an Ohio Valley bar
The softer demand has made it
difficult for many mills to get the full $43-per-ton
($2.15-per-cwt) surcharge-related increase they announced for
April 1 shipments, indicating base prices may have slid a
Five SBQ prices tracked by
AMM all rose in April, but only by $18 to $38 per ton,
depending on the product. For example, 1000-series 1-inch round
is fetching $890 per ton ($44.50 per cwt) on the spot market,
up 3.7 percent from $858 per ton ($42.90 per cwt) a month
"The steel mills desperately
want price to go up but demand is not supporting it," said a
source at a Detroit-area service center operator. "First
quarter was just OK at best. There is more optimism but
thats not yet showing up in daily shipments. We are
buying what we need because we dont see any price risk.
Our inventory is adequate for current demand."
This past week, pricing leader
Nucor Corp. said it would lower its SBQ scrap surcharge by $21
per ton ($1.05 per cwt) for May 1 shipments (
amm.com, April 11).