NEW YORK The flat-rolled steel market has been marked by stability this week, but some distributors warned that too much stability could be cause for concern.
Steel prices have held steady in recent weeks due to some supply disruptions and discipline by domestic mills in holding the line, sources said. However, market players contacted by AMM this week noted that the market holding status quo for too long may mean prices have the potential to slide. Others have reported that lower deals are inching back into the marketplace.
"Right now, everyone is holding their breath because it could go either way," one Midwest service center source said. "I dont want to see it fall apart because Ive got too many tons at the mill."
TMK Ipsco chairman Piotr Galitzine said that hot-band prices have hit a potential inflection point, and markets are likely to fall in the near term.
"This run-up (in coil prices) has plateaued and we expect hot-rolled coil prices to come down in September and continue to trend down as we dont see any major drivers that would support a long-term price hike," he told analysts during an Aug. 28 earnings conference call.
As a result of this "plateau," several market players have speculated that another increase may be near to continue pricing momentum and halt a potential slide.
"Were waiting on this shoe to drop to come in the next increase letter," a second Midwest service center source said. "Im pretty sure its going to happen, and by a pure inventory standpoint no one has really bought anything and I dont think people can continue like this."
Others have said that certain mills are bowing to pressure, citing deals that are providing a little bit of pushback.
"If you go to five guys, someone will crack with their price," one Northeast service center source said. "Things have been quiet this week, but itll probably pick up next week because its usually busier in September. Obviously, I dont think anyone wants things to drop."
SteelBenchmarkers latest report, released Aug. 28, confirms the flat trend, with U.S. hot-rolled band unchanged at $720 per tonne ($653 per ton) compared with two weeks earlier, while cold-rolled also was steady at $836 per tonne ($759 per ton).
Looking forward, service centers said that a real pickup in demand would solve the underlying issue and help with margins at the service center level, which some had cited as a point of contention with mills raising prices so quickly this summer (amm.com, Aug. 16).
"Things are stable but Im skeptical about whats ahead because I dont see an increase in demand," a third Midwest service center source said.