CHICAGO Steel service
centers are sitting out of the market amid concerns about
building inventories as business remains slack after
registering mixed shipping results in March.
U.S. and Canadian steel service
center shipments totaled a combined 3.9 million tons in March,
up 1.8 percent from 3.83 million tons the previous month but
10.9 percent below nearly 4.38 million tons in March 2012,
according to Metals Service Center Institute (MSCI) data.
"Its very quiet out there.
People are afraid to take positions on inventory. ... When
business was at least halfway decent, customers bought for this
month and next. Now they are just buying for this month or on a
weekly basis," a source at a Great Lakes flat-rolled
distributor said. "(Our company is) not afraid to take a
position, but we are very selective on what were
purchasing. Material we bought three to four months ago,
were not buying that now."
Steel demand is increasing, but
only slowly, the chief executive officer of a major North
American sheet processor said. "You dont have to buy much
steel. Given the short lead times, you dont need your
inventory to be longer than mill delivery: four to six weeks
and, in some cases, two weeks."
Taking a longer view, a Midwest
service center executive is concerned that "we are a third of
the way through a lost decade."
There are two ways to exit a
recession: by consumer spending or exports, he said. But real
unemployment is too high and wages are declining, which means
"American consumers have no cash flow. ... Plus, there is this
sequestration. No one likes uncertainty, so they batten down
the hatches. They are not buying a car, a refrigerator or
taking a vacation. The government is creating uncertainty and
retarding consumer-based growth."
Businesses as well as local and
state governments are making do with the assets they have and
are delaying buys, he said. Meanwhile, "steel pricing is doing
nothing. The end of the year will be near where we started the
year, but there are theatrics in the meantime, all for
"We need mills to have a (price)
increase and have it stick," the Great Lakes distributor source
said. "Service centers dont want to pay X amount and then
see prices drop. Margins are so thin already."
U.S. service center steel
shipments totaled 3.43 million tons in March, up 1.8 percent
from 3.37 million tons the previous month, but average daily
shipments fell 3.1 percent to 163,200 tons because March had
one more shipping day than February. First-quarter shipments
totaled 10.44 million tons, down 6.6 percent from 11.18 million
tons a year earlier.
inventories totaled 8.49 million tons at the end of March, down
0.2 percent from 8.51 million tons a month earlier.
Canadian service center steel
shipments totaled 472,200 tons last month, up 2 percent from
463,100 tons in February, but average daily shipments fell 3
percent to 22,500 tons. First-quarter shipments plunged 13.1
percent to under 1.46 million tons from 1.68 million tons a
year earlier. Canadian inventories fell 2.2 percent to 1.73
million tons from 1.77 million tons at the end of February.