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Sheet buyers question price hike in flat market

Keywords: Tags  steel prices, Severstal, Nucor, ArcelorMittal, hot-rolled coils, catherine ngai

NEW YORK — Steel sheet prices have remained relatively flat for the third consecutive week, and some industry sources wonder whether the recent hike by at least one domestic mill will be accepted industrywide.

Dearborn, Mich.-based Severstal North America Inc. said in a July 23 letter to customers that it was boosting base prices for its steel sheet products effective immediately, setting hot-rolled coil at $33.75 per hundredweight ($675 per ton) and cold-rolled coil and hot-dipped galvanized at $38.75 per cwt ($775 per ton) (, July 23).

But AMM has not yet seen hikes by other mills, and some sources wonder whether there will be enough support for another price hike in the market after a number of supply-side issues plaguing the sheet sector in recent weeks—including AK Steel Corp.’s blast furnace outage and slab issues at ThyssenKrupp AG’s facility in Brazil—have effectively been resolved.

"For a few weeks now, things have been pretty flat, and what ends up happening if you don’t move is that it becomes a sign of weakness. Then there will be pricing pressure," one Midwest service center source said. "This increase seems like a preemptive strike against a fall. It’s been too flat."

Industry participants pointed out that for the move to be effective, at least two of the three largest U.S. mills—ArcelorMittal USA LLC, Nucor Corp. and U.S. Steel Corp.—would have to get on board.

Spokeswomen for all three companies declined to comment.

Others said that not only would higher pricing mean an opportunity for imports, but margins are being squeezed due to competition at the service center level. In addition, the extra tons coming back online will mean overcapacity in the fall.

"I laughed a bit when I saw the increase and kind of rolled my eyes," a southern service center source said. "If you bought hot-rolled at $33.75 (per cwt) you’d never get a return on it (at the service center level) because you’re going to get killed. Take annual consumption, take the annual capacity in this country and add in imports, and you’ve got a pretty big variation there. Take a look in the mirror, because we’ve got overcapacity again. This isn’t going to be a seller’s market for long."

But business has been stable and discounts have yet to be seen, other sources said. Lead times for most major mills are out to late August for hot-rolled and September for coated, which some see as a positive sign.

"Things are good. On our side, it’s been pretty solid," a second Midwest service center source said. "We’ve tried to inquire about pricing this week, and the mills have continued to be non-negotiable on smaller tons of orders."

SteelBenchmarker’s latest report, released July 24, confirmed the relatively flat trend, with U.S. hot-rolled band inching up just 0.6 percent to $702 per tonne ($637 per ton) from $698 per tonne ($633 per ton) two weeks earlier, while cold-rolled coil edged up 0.5 percent to $808 per tonne ($733 per ton) from $804 per tonne ($729 per ton) in the same comparison.

Some questioned if the timing of the increase was right, particularly as market stability could be a good sign.

"Things are flat right now. With AK back up and TK getting their slabs started, it’s more of a psyche thing than anything," one mill source said. "People have taken their foot off the accelerator and are seeing light at the end of the tunnel. From an increase perspective, the mills are leery about pushing things up."

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