NEW YORK U.S. mills are said to be pushing for higher pricing, effectively taking lower-priced deals off the table as buyers anticipate a near-term sheet increase.
With the announced sale of ThyssenKrupp AGs Calvert, Ala., facility at the end of Novembercombined with an uptick in raw material costs, steady demand, razor-thin inventory levels and extended lead timesmarket speculation rose this past week that a sheet increase is in the works.
"Things are heating up, and Im expecting another round of increases," one Midwest service center source said. "Im hearing it from every (mill) rep. My suspicion is that itll happen very soon."
Hot-rolled coil remained unchanged this past week at $33.75 per hundredweight ($675 per ton), with larger tonnages reported in the $33- to $33.50-per-cwt ($660- to $670-per-ton) range. Cold-rolled coil was steady at $39 per cwt ($780 per ton), with some reporting buys at $39.50 per cwt ($790 per ton).
Demand-wise, most service centers contacted by AMM said business in November was either "good" or "steady."
While December is typically a quieter month, marked by fewer shipping days and more holidays, the stability looks set to carry forward into 2014, they said.
"Most of the signs I see look like 2014 will be better," one Mid-Atlantic service center source said. "Significantly better? Possibly. It looks like things are getting more interesting. Plus were looking forward to next year because we think commercial construction will come back significantly."
One factor that could work in U.S. steelmakers favor is the recent announcement of the sale of ThyssenKrupps Calvert facility, which buyers had previously speculated would help tighten the market due to industry consolidation.
Sources said this past week that Chicago-based ArcelorMittal USA LLC and Tokyo-based Nippon Steel & Sumitomo Metal Corp.s move into the market would help raise the bottom range of pricing.
"I dont think ArcelorMittal has any intention of undercutting the domestic business. Itll help bring the floor up a little bit," a second Midwest service center source said. "I think well see another increase come either end of December or beginning of January to get us through January."
However, one hesitancy that buyers expressed concerning a price increase is the growing spread between domestic and foreign material, which has hit the $5-per-cwt ($100-per-ton) range for most products. But with most of the imports set to arrive at the end of the first quarter, others have said that the first quarter looks steady.
"People are really worried about imports for March or April," a third Midwest service center source said. "On the other hand, mills arent capitulating. Theyre playing hardball right now with contracts and pricing. Demand is fine. Theres a lot of pent-up demand for (the) first quarter because so many people are on the sidelines."
Other buyers have seen higher offers from trading houses, a sign that world prices could also be moving up on the back of higher U.S. tags, they said.
"In a rising price environment, people are buying to beat the price increases," one northern service center source said. "Around the world, foreign prices are going up too."
But buyers remain cautious moving forward, refusing to load up on inventories even though demand remains very stable.
"Businesswise, were quoting a lot these days because there are shortages of certain items out there," a fourth Midwest service center source said. "The first two weeks of December are looking to be pretty good. Then itll likely slow down in the second half. Everyone is still very cautious. Demand seems to be constant, though, and very stable."