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Steel buyers’ mood improving: survey

Keywords: Tags  carbon steel, flat rolled, steel buyers forum survey, lead times, pricing, mill outages, foreign offers, demand balance economic activity

CHICAGO — The mood of carbon steel sheet buyers has risen along with pricing, and many hope demand will soon balance out supply, allowing current pricing to be sustained for the next 60 to 90 days.

"Prices are definitely on the upswing due to the supply-demand equation coming more in balance," an East Coast flat-rolled distributor source told AMM, citing a planned production outage at ArcelorMittal USA Inc. and an unplanned one at AK Steel Corp., less foreign supply, apprehension following the filing of an anti-dumping case against oil country tubular goods and lengthened lead times.

A Midwest sheet distributor source agreed that prices were firming, noting that his suppliers were not "as flexible or as negotiable as in the past, so the new prices are starting to stick."

Spot sheet prices, which had dropped to as low as $560 per ton ($28 per cwt) f.o.b. mill in late May and lower still for large-volume orders, have since risen to about $640 per ton ($32 per cwt) following a series of domestic price hikes. According to buyer sources, most mills are achieving the higher prices, although some suggested that a large-volume order could still garner a discount of as much as $25 per ton.

As prices have ticked up, order activity has rebounded, steel buyers told AMM.

"Before the holiday, we were very busy. People freaked out at price increases, realizing they are going to stick. Some were caught with their pants down," a Mid-Atlantic broker and distributor said.

A Great Lakes buyer confirmed the trend, noting that lead times at many mills have pushed out as a result. "Some hot-rolled schedules are booked to early August, and cold-rolled schedules are closed for July," he said.

However, the Midwest sheet distributor source expressed some skepticism about quoted lead times, saying orders placed last month have arrived earlier than the estimated delivery dates. "We are trying to stay as lean as we can because there is no justification for higher prices in terms of demand and relatively little justification based on raw material costs," he said.

The results of the latest Steel Buyers Forum survey by the Institute for Supply Management (ISM) reflect the improved sentiment: 46.2 percent of June respondents expect sales and production to be up in the next six months, up from just 35.7 percent of those surveyed in May.

Incoming orders and backlogs remain stable to slightly improved, and while most say inventories are not quite balanced against demand, a fraction of buyers still intend to increase stocks in the next six months vs. none who planned to do so in May.

"I feel a lot better about the rest of the year today than I did three weeks ago," the East Coast distributor source said July 9. "When we came in yesterday, we had orders all over the place. That indicates end users are motivated in a market like this."

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