Weaker-than-expected market conditions, continued oversupply
and barrel-scraping prices continue to plague the steel sheet
market, sources say, with some wondering if a recovery is
anywhere in sight despite at least one major mills recent
push to turn the market around.
"There isnt enough
(demand) to raise prices right now. The fact of the matter is
there aint nothing out there," one Midwest service center
source said. "I dont know how anyone thinks things will
This past week, Severstal North
America Inc. issued new minimum base prices of $32 per
hundredweight ($640 per ton) for hot-rolled bands and $37 per
cwt ($740 per ton) for cold-rolled and galvanized coils
effective April 22 (
amm.com, April 18). The move by the Dearborn,
Mich.-based steelmaker comes amid a multiweek fall in domestic
sheet prices, with most transactions reportedly now below the
But market sources say they
arent optimistic the new minimum base prices will stick,
particularly as spot prices continued to soften in recent
hot-rolled coil price fell to $29 per cwt ($580 per ton) this
past week, down from the previous weeks price of $29.50
per cwt ($590 per ton) f.o.b. Midwest mill. AMMs
cold-rolled sheet price stayed in the $34.50-per-cwt
($690-per-ton) range, although market participants said that
orders in the $34-per-cwt ($680-per-ton) range were
Much of the reason for the
current softness in prices is that mills and service centers
said they did not experience the typical seasonal uptick in the
first quarter, with some worrying that the second quarter will
continue to be depressed.
"First quarter nine times out of
ten is an up quarter and people are swamped. It didnt
happen this year," a second Midwest distributor said.
Nucor Corp. and Steel Dynamics
Inc. executives said during earnings calls this past week that
the outlook for the sheet market remains grim, particularly as
oversupplied markets, short lead times and economic uncertainty
appear likely to continue (amm.com,
April 17 and
"Things are slow. Were
doing OK, but were fighting tooth and nail for business,"
one mill source told AMM. "Prices are depressed to the
point where a lot of business doesnt make sense.
Theres a very negative sentiment among buyers right now
because everyone is so afraid to buy. You add it all together,
and theres a lot of capacity."
Others also cited overcapacity
as the primary barrier to mills efforts to raise
"My new philosophy is that you
can put 50 things up on your blackboard as to why prices should
go up. But if you have one thing on the otherwhich is too
much capacitythat will override the other side of the
blackboard," said the second Midwest service center source.
"The mills are too afraid to cut capacity because they might
lose market share. The last increases didnt have enough
strength. Without lead times pushing forward, (Severstals
increase) isnt going to stick (either)."
Some wondered if recent moves by
some U.S. mills to back away from discounting off the CRU index
will enforce stability on the spot market (
amm.com, April 18). In particular, some said that
getting rid of discounts would give mills better margins.
Others added that larger service centers have been putting
pressure on mills to bring spot prices closer to discounted
contract prices because mills are hungry for new orders.
"I think the move away from CRU
discounting will have an immediate impact on the spot market
pricing from the mills," said a third Midwest service center
source. "Part of the problem was that CRU discounting was
apparently leaking into the spot market. My instincts tell me
the move away from CRU discounting may mean an increase in spot
Others said that with mills
looking to fill order books, any upward momentum in pricing
will likely be short-lived.
"Theres no reason to think anyone will buy at the new
price," the first source said. "I guarantee that if you give
the mills a thousand tons, I would bet anyone a hamburger
theyll take the old price."