for special bar quality (SBQ) products is typically a tale of
two marketsautomotive and nonautomotivebut the
divide now seems more pronounced with stocks of automotive
material at "dangerously minimal" levels, buyers told
automotive-grade SBQ producers "cannot get caught up" on their
scheduled deliveries, an eastern Great Lakes forge operator
extremely, dangerously minimal throughout the supply chain. You
cannot get everything and, as soon as you do, youre
putting it into your processing line and manufacturing it," he
said, adding that short supply means certain vehicle assembly
lines are "on the verge of shutting down every day."
A distributor to auto
suppliers agreed, saying lead times for automotive SBQ are
stretching into March. "Mills are very busy and close to
shutting down (auto) plants."
But among those
consuming nonautomotive grades, supply is not as taut.
"We are not seeing
lead times pushed out among our vendors," a southern SBQ buyer
said. "Were finalizing rollings for December now. But if
your mills are tied to auto, those rollings are already into
February and March."
Most domestic bar
producers have capacity utilization in the mid-70 percent range
and lead times are five to six weeks, "which puts no pressure
on pricing," a Midwest bar processor said.
"Demand is not that
strong but, for being the middle of November, business has not
dropped off," a Mid-Atlantic cold finisher said, adding he
plans to hold his prices flat.
"If youre in
automotive, youre doing well and youre optimistic
for 2014. Other industries are flat. Theres nothing
exciting going on," a national distributor of bar, rod and wire
tracked SBQ prices moved slightly higher Nov. 14, up $6 to $16
per ton, compared with a month previously, largely because
deliveries will occur in December, when the scrap surcharge
will rise $30.
More than a half-dozen
buyers agreed that spot and contract base prices will remain
flat heading into 2014 and beyond. "The base is status quo,"
the national distributor said.
Talks continue on 2014
contracts. "The fact that mills are dragging their feet to
address pricing means they fear a reduction for 2014," the
"If they were going
for a big increase, they would roll it out earlier to give
people a chance to fight it out. (This year,) theyll come
in December and offer a flat base year over year and then try
to get it signed quickly," he predicted.
He surmised that some
producers would love to raise 2014 prices but cannot do so
under the burden of delayed deliveries. On the other hand, "I
dont think it will go lower. I think weve see the
bottom on pricing."
The first distributor
agreed. "We have seen stabilization."
He and other market participants said they will not go long
on tons, will try to keep inventories in line with demand and
turn them frequently. "Were not speculating. Thats
a bad word around here," one source said.