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Mills initiate third round of steel sheet hikes

Keywords: Tags  steel prices, ArcelorMittal, Dofasco, Charles Bradford, sheet hikes, catherine ngai

NEW YORK — North American steel mills have kicked off a third round of flat-rolled price hikes as extended lead times, labor and production outages as well as low inventory levels give the market some upward support.

Hamilton, Ontario-based ArcelorMittal Dofasco Inc. has raised base prices on its steel sheet products for all new spot orders by Canadian $20 ($19.10) per net ton effective immediately, citing devaluation of the Canadian dollar, according to an internal memo dated June 25.

Customer sources told AMM that its U.S. counterpart, ArcelorMittal USA LLC, also has been informing customers of higher prices, with its hot-rolled coil now at $32.50 per hundredweight ($650 per ton) and cold-rolled and galvanized product at $37.50 per cwt ($750 per ton), although AMM has not seen an official announcement from the Chicago-based steelmaker.

Other mills were widely expected to follow the move, which comes just two weeks after a second round of hikes announced earlier this month (, June 13) and within five weeks of the original increase of the cycle in May (, May 23).

Rumors that a third round of increases was in the works have been circulating for more than a week, but speculation heated up earlier this week when West Chester, Ohio-based AK Steel Corp. was forced to temporarily idle its blast furnace in Middletown, Ohio, after an unexpected mechanical failure (, June 24).

That unexpected outage, coupled with the continued lockout at U.S. Steel Corp.’s Lake Erie Works, Essar Algoma’s potential labor stoppage at the end of July (, June 20) and ArcelorMittal USA’s planned C6 blast furnace outage in Cleveland in the fall (, June 19), has given the sheet market some strong fundamental support, sources said.

Add that to a stronger-than-expected automotive sector and low inventory levels at service centers, and market participants are expecting strength in domestic sheet pricing to continue through the traditionally slower summer season.

"Things are going to be different this summer," Charles Bradford of New York-based Bradford Research Inc. told AMM. "Keep in mind the reason for the slowdown was usually the automotive companies taking off a few weeks. But they’ve already announced that they’ll take less time off this year because automotive is so strong."

Bradford added that with the July scrap outlook leaning toward the upside (, June 26), mills may find even more support as they look to push through increases.

"Things are tightening up for sure," a Midwest service center source said. "Before, hikes were to establish a floor. This time around, it’s supply based. The mills have been very strict on pricing, with quotes good only for that day. No one has cracked."

SteelBenchmarker’s latest report, released June 26, confirmed the higher pricing, with U.S. hot-rolled band rising 2.5 percent to $668 per tonne ($606 per ton) from $652 per tonne ($592 per ton) two weeks earlier, and cold-rolled coil up 1.8 percent to $779 per tonne ($707 per ton) from $765 per tonne ($694 per ton) in the same comparison.

Others point out, however, that with imports set to hit U.S. shores later this summer and early fall, the upward momentum could be short-lived.

"The mills don’t care about imports. Their mentality right now is: ‘Too bad, so sad, we’ll get it while we can,’" said another Midwest service center source. "If the momentum shifts, prices will be hammered down again. My feeling is that the mills will keep pushing it as far as they can."

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