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
"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
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."