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
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) (
amm.com, 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 weeksincluding AK Steel
Corp.s blast furnace outage and slab issues at
ThyssenKrupp AGs facility in Brazilhave effectively
"For a few weeks now,
things have been pretty flat, and what ends up happening if you
dont 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. Its been too flat."
pointed out that for the move to be effective, at least two of
the three largest U.S. millsArcelorMittal 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) youd never get a return on it (at the service
center level) because youre going to get killed. Take
annual consumption, take the annual capacity in this country
and add in imports, and youve got a pretty big variation
there. Take a look in the mirror, because weve got
overcapacity again. This isnt going to be a sellers
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
"Things are good. On
our side, its been pretty solid," a second Midwest
service center source said. "Weve tried to inquire about
pricing this week, and the mills have continued to be
non-negotiable on smaller tons of orders."
SteelBenchmarkers 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
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,
its 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."