NEW YORK U.S. sheet market participants continue to report stable buying activity this week, but some are wary about the onset of the traditional summer slowdown.
"Things have gotten quiet, and Im starting to see the beginning of the summer doldrums," an East Coast service center source said. "I dont think there are long-term projects out there and were not seeing a flurry of quotes. With the summer coming along, I think the mills will have a fight on their hands."
The first quarter is usually strong for steel mills as buyers come in to replenish inventories, followed by a slower summer period. However, this year the first-quarter uptick never really materialized, sources said, leading some to wonder whether the summer might also buck the traditional trend.
"My feeling is that this July wont be as slow as it was last year. Weve picked up a few accounts, so well be a little ahead of last year," a Midwest service center source said.
But while the market is divided on what the summer might bring, most participants report that current demand levels remain fairly stablethough nothing to write home about.
"On days like this, were not going to be throwing big parties, but were certainly not too upset. Things are steady, and only slightly better than where they were back in the first quarter," the Midwest source said. "Things are trying to get betterthats how I would describe it."
A northern service center source agreed that things were stable or even modestly improving, although he conceded that its hard to tell whats behind the activity. "Were dealing with thousands of customers, so for us it can be fairly blurred whether it was inventory replenishment or actual demand," he said. "But were seeing kind of an uptick in activity and larger orders booked by customers. Overall, its been positive."
Possibly driving that stable sheet demand is a recent round of price increases. Most mills have been successful in holding onto a large part of an announced $50-per-ton price hike led by Pittsburgh-based U.S. Steel Corp., a move quickly followed by other mills (amm.com, May 23), and that upward momentum may have brought some buyers in off the sidelines (amm.com, June 11)..
SteelBenchmarkers latest report, released June 12, confirmed the higher pricing, with U.S. hot-rolled band rising 2.4 percent to $652 per tonne ($592 per ton) from $637 per tonne ($578 per ton) two weeks earlier, while cold-rolled coil was up 2.1 percent to $765 per tonne ($694 per ton).
Meanwhile, rumors continue to circulate about another price hike in the coming weeks that would solidify the previous one.
"There are strong rumors that another hike is coming, and because people ran their inventory levels down too low, people are going to continue to replenish," the northern service source said.
Others, though, argued that foreign imports on certain products may pick up in the summer months due to an increased domestic-import pricing differential (amm.com, June 12), which may ultimately lead to lower domestic tags in the medium term.