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SBQ prices follow scrap down: buyers

Keywords: Tags  special bar quality, SBQ, hot-rolled bar, cold-finished bar, bar pricing, bar demand, bar supply, steel bar Nucor

CHICAGO — Hot-rolled and cold-finished bar product prices both fell in May amid lower scrap surcharges, with hot-rolled taking the bigger tumble, market sources said.

"We’re fairly steady, but we are down 15 percent from last year," an Ohio Valley bar distributor said. "We’re hoping scrap finds a bottom soon."

"One month is good; one month is bad" in terms of orders, the distributor said. "There’s not enough consistency and little momentum."

An upper Great Lakes special bar quality (SBQ) distributor agreed. "There is flat demand and a lack of excitement in the market," he said. "It could be a tough quarter. Mills are desperately trying to hold prices firm and would like them to go higher, but demand is not supporting it."

AMM’s price for hot-rolled 1000 series 1-inch rounds now stands at $42.50 per hundredweight ($850 per ton), down from $44.50 in April, while cold-finished Grade 1018 moved down just 50 cents to $62 per cwt ($1,240 per ton). Cold-finished pricing frequently lags hot-rolled tags and faces less downward pressure due to longer lead times.

Producers’ scrap surcharges for June look poised to fall another $20 per ton, with Steel Dynamics Inc., Fort Wayne, Ind., the latest to slate a cut (, May 14). It follows a $22-per-ton cut by Nucor Corp., Charlotte, N.C. (, May 13).

"We’re dealing with a difficult business model," the Great Lakes buyer said. "Without the momentum, you cannot get the increases."

The pace of inquiries has slowed for a large cold finisher in the Midwest. "We had a bounce in the first quarter, but April and May have been status quo. ... We don’t foresee an upswing in June or July. There’s no urgency out there," he told AMM.

"When demand is down, we need to control inventory. So we are watching that, just like the original equipment manufacturers are," he added.

Business is down "a little bit" this month, one East Coast bar distributor said. "Machine shops either have too much work or don’t have any," he said. "Everybody’s saying something different, but the phone calls and e-mails are not as frequent."

A lower Great Lakes bar processor said that both his producers and customers have reported slowing business. But "we’re holding our own," he said.

"There’s no real change in market conditions from last month. Demand continues to be soft," a national bar distributor in the Southeast said.

"Everything other than Tier I and II automotive has been pretty soft," a second Great Lakes bar processor said. "People are still building nonautomotive parts, but the carmakers are pulling the wagon. ... If we had another 2012, I would be astounded."

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