NEW YORK Efforts by at
least four major mills to boost flat-rolled steel prices
could be foiled by a number of downward pressures, including
sliding raw material costs, oversupplied markets and lackluster
U.S. Steel Corp., Pittsburgh,
told customers May 22 it would immediately raise spot prices
for all flat-rolled steel products by a minimum of $50 per ton
amm.com, May 22).
A day later, ArcelorMittal USA
LLC, Chicago, raised minimum base prices to $610 per ton
($30.50 per hundredweight) for hot-rolled coil and $710 per ton
($35.50 per cwt) for cold-rolled and galvanized product, it
said in a May 23 letter to customers.
On May 23, Dearborn, Mich.-based
Severstal North America Inc. separately set new minimum base
prices for its sheet products as well. According to an e-mail
to customers, effective with all new inquiries, new base prices
are $610 per ton for hot-rolled sheet and $710 per ton for
cold-rolled and galvanized products, Severstal said.
AK Steel Corp., West Chester,
Ohio, also raised spot market base prices for all flat-rolled
products by a minimum of $50 per ton effective immediately with
new orders, it said May 23.
Other mills are expected to
follow, sources said, although some said the odds dont
seem to be in their favor.
"You can want a price increase
and you can deserve a price increase, but it only matters if
the market will allow it," one Midwest service center source
said. "There are still too many tons chasing too few orders.
Scrap prices are drifting down and so are iron ore prices. I
dont see an increasing trend in demand, and this whole
thing is becoming a game of smoke."
Hot-rolled band prices fell this
past week to $560 per ton ($28 per cwt) f.o.b. Midwest mill,
down from $570 per ton ($28.50 per cwt) the prior week.
The hike by U.S. Steel was the
first in more than a month, after Severstal North America Inc.
told customers in April that it was raising hot-band tags (
amm.com, April 18).
But with the typical summer
slowdown approaching, which also indicates softer scrap tags,
some said that any upward momentum will become increasingly
"I think that when we hit that
transition pointonce we hit the bottom and demand picks
upprices will move up very quickly," a western service
center source said. "The mills have been struggling for a long
time now just trying to make ends meet. At that point, this
increase will have some teeth. Until that moment, were in
Others suggested that a number
of other factorsU.S. Steels union lockout in
Nanticoke, Ontario; planned blast furnace outages at other
major mills; and the impending sale of ThyssenKrupp AGs
Steel Americas divisionmight work favorably for the
market in the coming months.
"I dont think were
going to see prices heading up in a major way, but I think this
will at least stop prices from going down further," a second
Midwest service center source said. "Theres no way in
hell that anyone will go up $50, but I can see maybe $20 or so.
The biggest trump will be lead times, and only extended lead
times will get prices going up."
And short lead times, coupled
with oversupply, could stymie any upside in real pricing in the
long run, others sources said.
"Oversupply remains a concern,
and could limit price upside despite positive demand outlook,"
Morgan Stanley Research analysts wrote recently. "While the
bankruptcy of RG Steel (LLC) in 2012 was an important first
(for) steel in rationalizing domestic capacity, remaining
global overcapacity continues to be a constraint on U.S. steel
prices despite our favorable domestic demand expectations."
Lean inventories from service
centers show further hesitancy by customers to buy steel.
According to recent Metals Service Center Institute (MSCI)
data, U.S. distributors held 5 million tons (2.3 months
supply) of flat-rolled carbon inventory in April, down from 5.2
million tons (2.4 months supply) in March.
"Looking at the MSCI numbers,
theyre really low. People are trying to sit out as long
as they can. No one is keeping stock," a third Midwest service
center source said.
While its unclear if the
price hikes will stick, some are hoping for a brighter
"This announcement, Im
skeptical on. But something has got to give in the next 60 days
or so because we cant continue this mucky muck were
in," a source in the South said. "I dont know what the
tipping point will be, but somethings gotta give. Maybe
this could be a game-changer."