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Steel sheet prices stable but change expected

Keywords: Tags  steel sheet, hot-rolled, cold-rolled, SteelBenchmarker, ThyssenKrupp, Catherine Ngai


NEW YORK — The steel sheet market remained steady this week amid lead times pushing closer to the end of the year, discipline on higher pricing and firm demand.

But market participants have underscored that the industry looks to be on the cusp of fundamental change, particularly as negotiations continue for 2014 contracts and rumors swirl of an imminent sale of Essen, Germany-based ThyssenKrupp AG’s Steel Americas operations.

"As far as I’m concerned, this is a nine-inning game and we’re just in the second inning," one southern service center source said. "The OEMs (original equipment manufacturers) are shocked because their price tags have gone up $60 per ton and they’re in denial. But look at spot—it’s up even higher ... things are changing quickly."

Rumors have been circulating in the market that the sale of ThyssenKrupp’s facility in Calvert, Ala., could be announced in the coming weeks, a move that would consolidate the industry and firm up pricing in the Southeast (amm.com, Oct. 29).

Meanwhile, as mills and buyers negotiate 2014 contracts, steelmakers say they will no longer offer index-based pricing, which could effectively change buying patterns and help mills’ bottom lines.

Some sources said this could change the outlook for 2014.

"It’s been a long time since mills had any pricing power," one Midwest service center source said. "It seems like it’s all falling into place for them and demand is getting better. I’m pretty bullish moving into January."

Lead times also have been extended, with hot-rolled moving into early December and cold-rolled and coated material into late December. Some mills are even reporting lead times as far out as the start of January.

However, imports set to arrive in greater numbers starting in the first quarter could change how much impact mills will have next year. With a greater price spread between domestic and foreign pricing, and overcapacity globally, some market participants wonder whether things could fall apart quickly.

"The big question now is that, given the bigger picture of global overcapacity and the regional picture of U.S. mills raising prices, will these mills be able to hold onto their price increases in the face of oversupply?" a second Midwest service center source said. "There’s pressure coming in the first quarter."

Squeezed margins remain a top concern for service centers unable to move the higher pricing onto their end customers. They said that something has to fundamentally change or the pattern won’t be sustainable. "Minimal. It’s been minimal," one Southeast service center source said concerning passed increases. "No one wants to say ‘uncle’ and give up on business. There have been very light increases passed along to the end-user, but it’s really so minimal that it’s not even worth mentioning."

SteelBenchmarker’s latest report, released Oct. 30, confirmed flat market conditions. U.S. hot-rolled band rose just 0.8 percent to $729 per tonne ($661 per ton) from $723 per tonne ($656 per ton) two weeks earlier, while cold-rolled coil inched up 0.2 percent to $839 per tonne ($761 per ton) from $837 per tonne ($759 per ton) in the same comparison.

But many participants said the future looks steady.

"Demand looks good. It’s not great, but it’s not bad. It’s just steady," a third Midwest service center source said.


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