prices for most special bar quality (SBQ) products have slipped
slightly this month compared with May amid short lead times,
plentiful inventories, stable input costs and languishing
demand outside of automotive, buyer sources told
"We are hanging on as
best we can," a Southeast bar distributor source said. "We hear
end users are benefiting from excess capacity and short mill
price for cold-finished Grade 1018 has inched down to $1,175
per ton ($58.75 per hundredweight) f.o.b. mill from $1,220 per
ton ($61 per cwt) at this time last month, while prices for
cold-finished Grade 12L14 have dropped to $1,210 per ton
($60.50 per cwt) from $1,240 per ton ($62 per cwt) previously.
Hot-rolled 1000-series 1-inch rounds have shown a little more
resilience, dropping just $3 per ton (15 cents per cwt).
Sources said that a
lack of robust demand from most sectors besides automotive is
largely to blame for the softer prices.
"Margins are weak for
us in June. Customers arent taking a forward position,
(especially) as mills are flexible and accommodating with their
shipments. We would like to see more robust activity, but
its not happening. Supply exceeds demand," the Southeast
bar distributor source said.
A source at an Ohio
Valley processor said his orders and shipments have not
strengthened either. "We hope for a pickup by the end of the
third quarter, but you cant judge tomorrow," he said. "I
just got an order by e-mail 10 minutes ago, at 4 p.m., and they
want it tomorrow."
The upside is that
with demand low, lead times from the mills remain short, he
said. That means his closest suppliers can "get us a truck the
next day," so he can meet immediate orders if he doesnt
have every size in stock.
An East Coast bar
processor source said that order entries are sporadic. "The
phone is ringing, then it isnt," he said.
Looking forward, some
SBQ market players arent optimistic an uptick is in
sight. A source at a full-line distributor in the Great Lakes
region, for example, sees a tough summer ahead. "As much as we
want prices to firm up and go north, theres no positive
momentum for demand. Although automotive is very good,
its not offsetting whats lacking in other
industries," he said. "Distributors would rather be out of a
product than have steel at the wrong price on the shelf."
However, "we are probably at bottom and so there may not be a
lot of downside risk."
A Midwest bar sales
executive agreed. "Summer is going to be lean," he said. "If
our customers arent buying, we shouldnt be either.
Lots of people have been sitting on inventories."
One SBQ processor
source said he had seen a pickup in one marketelectric
motorswhich he attributed to a regional pickup in
construction activity, especially home building, noting that
motors go into everything from appliances to garage door
His backlogs are
filling up more quickly each month as a result, he said, but
using normal caution, "we wont buy any differently."