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 hold.
"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 capacity."
There are some bright spots, like automotive, but other sectors are not holding up so well, sources said.
"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 up.
"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 distributor said.
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 bit.
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 ago.
"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).