Flat-rolled distributors are relaying mixed signals on both the
buy and sell sides of their businesses.
An Institute for
Supply Management Steel Buyers Forum survey shows forward order
trends up, backlogs up slightly, improved shipments vs. the
previous quarter and a 13-point jump in the percentage of
respondents expecting an upturn in sales and production in
their industries over the next six months.
Yet some sources told
AMM that lower scrap pricing, returning capacity at AK
Steel Corp., West Chester, Ohio, and Pittsburgh-based U.S.
Steel Corp.s Lake Erie Works in Nanticoke, Ontario, and
imports will pressure domestic hot-rolled and cold-rolled coil
prices into lower realms this fall.
Others arent so
sure. "I think people came back from the holiday to see that
their inventories are low. There are lots of whispers of
another price increase to shore up demand," one Mid-Atlantic
distributor said. "Its too late to bring in imports. If
your boats havent left the docks of Asia, they wont
be here until Thanksgiving. So you have a window of
opportunityif you did purchase importsto beat the
domestic increase. But if the domestic price falls apart,
thats not good."
A third argument for
stable domestic flat-rolled pricing is that mills are standing
tough, sources said.
"We are not seeing any
side deals being made. People are buying for todays
business and not going further out. They dont have the
cash to (buy large volumes and) keep inventory high. Banks are
not lending much money," an eastern Great Lakes service center
operator said, noting that both the consuming markets and steel
pricing are stable.
distributor said that while she hasnt heard of any
low-ball sales, "we assume there are side deals" for orders at
or above 5,000 tons. For a common grade at the right volume, "I
guarantee I could buy it extremely cheap. But who needs 5,000
Demand "has been
status quo," a Detroit-area sheet buyer said. "Nobody is
overwhelmingly optimistic or pessimistic. Some products are
selling better than others. Defense work tailed off quite a
bit, but the solar business is coming on strong. Automotive is
Foreign material is
due to arrive in September and October, landing along the East
Coast and Houston. "A lot of brokers are offering material," he
said, adding that softer scrap pricing will drive steel prices
down. "We are already seeing it, by about $20 per ton. And
thats on only a 1,000-ton order."
Lead times have
lengthened, the Detroit-area buyer said, but returning capacity
in Ontario and Ohio will add to the availability of
A Chicago-area buyer
put hot-rolled coil offers at $650 per ton, down $5 per ton
from the f.o.b. Midwest mill price before the holiday weekend
amm.com, Aug. 29).
"The mills are still
trying to hold their ground but prices remain negotiable," he
said. "We expect pricing to start dropping any day. If there is
a demand increase, we are not seeing it."
A Great Plains buyer
said he still hopes second-half economic activity will pick up.
"Thats important," he said.