CHICAGO Cold finishers, processors and distributors describe demand for special bar quality products as "quiet," "oscillating" and "soft."
Prices for five products tracked by AMM slipped between 0.8 and 1.9 percent this month, with 1000-series 1-inch-thick, hot-rolled bar taking the biggest hit, falling to $41.55 per hundredweight from $42.35 in June.
Prices are expected to rise $30 per ton ($1.50 per cwt) in August, however, as at least one producer notified customers last week of a scrap surcharge increase (amm.com, July 11).
"There is no movement in base pricing. I dont think youre going to see any concessions there," said a source at an Ohio Valley bar processor, echoing peers who said that producers remain resolute, a position that may have been secured by brief and scattered seasonal maintenance outages. "Demand stank in June but is looking better for July. We oscillate monthly, good and bad, good and bad," he said.
"Some mills are booked out further than others, but orders are relatively soft. Mills are being flexible but not desperate," said an executive at a cold reducing mill. "Thank goodness the mills are being disciplined; I dont think anyone wants to see prices erode. Even if a mill came in and offered a block of tons right now at a below-market price, we wouldnt take it because that just indicates by the time that metal arrives there would be a better deal on the table."
As for inventories in the supply chain, customers are sitting on their hands. "There is not a lot of inventory downstream, but theres still too much at the distribution level," a service center purchasing manager said. "Were trying to reduce ours further by not replacing some of the material we sell."
If there is any good news, its that end-users do not have excess supply. "None have gone long or (are) flush with inventory," a Southeast service center sales executive told AMM.
Others agreed that excess material is not the problem. "Customers are not building stocks, but just buying for orders in hand," a Midwest distributor source said.
July is "soft," with orders falling "quite significantly," the Southeast executive said. "Its hard to understand where pricing is. I cannot believe all our competitors buy better than we do. They are selling product below the replacement cost.
"The root cause," he added, "is demand is just not there. We are at the door of every customer trying to scare up orders."
A Great Lakes distributor source said he also was "working hard through the dog days of summer and hoping for a stronger second half."