and Canadian service centers recorded drops in both steel
shipments and inventories in May as market players questioned
the ability of domestic mills to stick to their guns on
recently announced price moves.
Customers continue to
buy only what they need in a market characterized by intense
price competition and abundant steel supplies, attendees said
on the sidelines of the Steel Success Strategies XXVIII
conference in New York, sponsored by AMM and Englewood
Cliffs, N.J.-based World Steel Dynamics Inc.
"Customers are calling
five distributors (to get the lowest price) before placing an
order," a Great Lakes sheet distributor said. "Nothing has
changed demand, so customers do not understand why prices are
On June 14, Severstal
North America Inc. became the most recent major domestic steel
mill to raise its minimum base prices (
amm.com, June 17).
ArcelorMittal USA LLC,
Chicago, announced June 13 new minimum base prices of $630 per
ton for hot-rolled coil and $730 per ton for cold-rolled and
galvanized product, and Pittsburgh-based U.S. Steel Corp. and
Charlotte, N.C.-based Nucor Corp. reportedly made a similar
amm.com, June 14).
Buyers also cast doubt
on efforts by domestic mills to offer firm price options.
One service center
operator said mills are likely offering fixed prices because
they expect tags to tumble, and prices are trending downward
due to weak demand and high-priced domestic steel attracting
more import competition.
U.S. service centers
shipped nearly 3.7 million tons of steel at a rate of 166,300
tons per day in May, down 4.8 percent from roughly 3.8 million
tons at a rate of 174,600 tons per day in May 2012, according
to the latest data from the Metals Service Center Institute
(MSCI). In the first five months of the year, U.S. service
centers shipped 17.7 million tons, off 4.6 percent from the
same period last year.
In Canada, 515,000
tons of steel shipped in May at 23,400 tons per day, down 10.1
percent from 573,100 tons in May 2012 at a daily rate of 26,000
tons. In the first five months of the year, Canadian
distributors shipped about 2.5 million tons, off 9.9 percent
from the same year-ago period.
service centers held 8.03 million tons of stock (2.2
months supply) in May, down 11.6 percent from 9..08
million tons (2.4 months supply) a year earlier, MSCI
data show. Canadian distributors stocks slipped to 1.5
million tons (3.0 months supply) in May, down 7.5 percent
from more than 1.6 million tons (2.9 months supply) in
"May service center
data point to soft shipments and continued inventory
destocking," Morgan Stanley & Co. LLC analyst Evan Kurtz
said in a research note June 18.
and inventories appear to be translating into weaker prices,
market sources said.
"Contract buyers are
paying $600 (per ton) and spot buyers are still getting
(contract prices)," a Midwest processor and distributor
Even the possibility
of higher prices isnt stimulating buying, several market
sources said. "We are not building inventory," a national
flat-rolled distributor and processor said. "This little blip
Still, some buyers
said supplies should tighten as domestic producers take their
seasonal summer maintenance outages.
Corinna Petry, New
York, contributed to this story.