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Market mixed on direction of steel sheet prices

Keywords: Tags  flat-rolled steel, steel sheet, hot-rolled, cold-rolled, U.S. Steel, sheet, Lake Erie Works, SteelBenchmarker Catherine Ngai

NEW YORK — Market players remain mixed over where steel sheet prices will move in the next few months, with participants continuing to cite stability in the sector, sources said.

After a number of price hikes through the summer, sheet tags have remained fairly stable in the past few weeks, and many service center sources said they are holding off buying until a clearer picture emerges. Others said that this month will be indicative of whether prices remain strong or fall apart in the coming months.

"We’re in a few critical weeks right now and people are testing the resolve of the mills to keep prices up," one northern service center source said. "I hope they stick, and there’s certainly no need for them to come off of the prices, but we’ll see what happens."

An increasing number of service center sources told AMM that they have moved to buying on an "as needed" basis, with many resolving to refrain from placing new orders until they have a commitment from an end customer.

Mill lead times have pushed out in recent weeks, particularly on coated material, which some said could indicate strength in the sheet market.

"There’s a lot of pushback from end customers who don’t want to pay higher prices, but inventory costs are going up because most of the cheap steel people bought is going out the door," a Midwest service center source said. "There’s a lot of people who think we’ll be at a bottom in November, and people are pushing inventory out the door banking on the fact they’ll buy cheaper in November. But as lead times continue to push out, that window for the end-of-the-year sale gets smaller and smaller. I personally don’t think we’ll have a huge fire sale if lead times continue to push out."

Skeptics, though, counter that while demand has remained steady, levels remain far too low. Without a pickup in real demand, higher prices cannot be justified, they said.

"I’m betting that by Oct. 1 prices will go down again. There’s no reason for it to hang up there," a second Midwest service center source said.

Others agreed, noting that with supply constraints resolved, particularly with the return of Pittsburgh-based U.S. Steel Corp.’s Lake Erie Works in Nanticoke, Ontario, after an 18-week lockout, downward pressure is increasing.

"We’re anticipating that pricing will go back down again. With U.S. Steel settling, it’s causing psychological pressure. There are some planned outages, but there will also be tons added back into the marketplace that weren’t there in the last five months," a third Midwest service center source said. "From my own standpoint, things look to weaken again."

SteelBenchmarker’s latest report, released Sept. 11, confirmed the flat trend, with prices remaining virtually unchanged for the second consecutive report. U.S. hot-rolled band dipped 0.3 percent to $718 per tonne ($651 per ton) from $720 per tonne ($653 per ton) two weeks earlier, while cold-rolled slipped 0.1 percent to $835 per tonne ($758 per ton) from $836 per tonne ($759 per ton) in the same comparison.

Sources along the coastline said imports set to arrive in the fall will certainly mean pressure on domestic tags, although several traders said Asian prices have since increased from lower levels.

Looking ahead, low inventory levels and longer lead times may mean service centers won’t have as much leverage as they did before the summer to push for deals.

"I don’t think we’ll see much of a change one way or another," a Southwest service center source said. "Service centers are relatively tight on their inventories, and lead times have pushed out. They can’t afford not to place some orders now, and that’s probably a good case for prices to hold steady. I do think they’ll soften closer to the end of the year, but they’ll remain rather steady."

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