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Steel buyers puzzled by disconnect on hikes

Keywords: Tags  steel, pricing trends, steel prices, buyers, steel imports mills, price hikes, service centers, lead times CRU-minus

NEW YORK — Steel buyers were puzzled this week by some U.S. mills’ attempts to boost prices while others seemed to drag their feet on announcements, sources said.

Regardless, with most mills expected to climb on board the increases, buyers have said that one factor that continues to loom over the market is compressed margins due to a difficult resale market.

"I’m as confused as the next guy right now," said one East Coast service center source. "My main supplier has threatened to raise the price on me and no one seems to be selling off replacement costs. All this is just driving me deeper into offshore."

Severstal North America Inc., Dearborn, Mich., last week set hot-rolled at $35 per hundredweight ($700 per ton) and cold-rolled and coated at $40.50 per cwt ($810 per ton); and AK Steel Corp., West Chester, Ohio, set an across-the-board boost of $30 per ton (, Nov. 7).

While other mills have yet to publicly raise prices, a number of buy-side sources said they have been quoted higher numbers from both integrated and mini-mill steelmakers, although some of the larger players remain silent.

Sheet prices look poised to hold steady or tick up slightly through year-end, particularly with lead times moving comfortably into December and January, sources said.

"Most people think this will hold through January and then start coming down a bit in February," a Midwest service center source said. "A lot depends on what’s going to happen, still, with ThyssenKrupp (AG) and capacity. On the other hand, the spot market is seeing a major change because of the lack of index-based discounts. ... The downside isn’t quite what it used to be."

Buyers also continue to discuss how 2014 will look absent the 5-, 6-, 7-percent-plus discounts seen in 2013. While mills and buyers confirmed that most contracts are still in negotiation, an increasing number of participants believe that producers will hold out.

"Let’s face it, the mills aren’t going to cave—it ain’t happening," one southern service center source said. "Why would you have played the game for this long just to give in now? The cards have been dealt, and I don’t think anyone really likes their hand. But no one has a way out."

Others said order books have been steady recently.

"Our business has been steadier than ever," a Midwest service center source said. "September had a nice spike and October turned out to be the busiest month of the year. From what I see in November, it looks to be a solid month."

SteelBenchmarker’s Nov. 13 report confirmed the steady trend, with U.S. hot-rolled band up just 0.7 percent to $734 per tonne ($666 per net ton) from $729 per tonne ($661 per ton) previously, and cold-rolled coil up 0.8 percent to $846 per tonne ($767 per ton) from the $839 per tonne ($761 per ton).

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