finishers, forges and distributors have expressed anxiety about
the potential for excess domestic production capacity for
special bar quality (SBQ) products, and particularly how an
overabundance of supply may affect pricing down the road.
are of concern," a southeastern distributor source told
AMM. "Timken (Co.) brought on more (capacity). Nucor
(Corp.) has enhanced its capability to produce more SBQ
product. (Steel Dynamics Inc. put on) additional tons and they
are kind of the wild card."
"I am concerned about
overcapacity in the marketplace," a source at a Mid-Atlantic
cold drawer said. "Republic (Steel Co.) is out with the Lorain
(Ohio) furnace, but when they get it back up and running it
could put downward pressure on pricing."
Overcapacity in the
bar business is due to continued weak construction-related
activity, he said, "so mills are all fighting for the same
piece of business."
Once Fort Wayne,
Ind.-based Steel Dynamics gets its 325,000 tons of incremental
capacity online and Republic Steels Lorain melt shop is
back up, "there is more than enough domestic capacity," one
southern cold finisher said.
With a blown
transformer causing a 47-day furnace outage in Canton, Ohio,
last summer (
amm.com, Aug. 6) and a November fire at the new
electric furnace shop in Lorain (
amm.com, Dec. 2), Republic "keeps stepping on
their necktie," the cold finisher source said.
Sources pegged current
mill lead times at four to five weeks for standard, common
grades and sizes, and six to eight weeks for highly specialized
products, especially those for automotive applications.
A forge operator
source said that Republic isnt the only mill falling
behind on deliveries (
amm.com, Jan. 10). "Its on a case-by-case
basis. Sometimes you get a partial order, sometimes you get
nothing," he said of one producer he sees taking on additional
business that demands a premium. Automotive orders "are what
they are chasing."
agreed that the anxiety occurs upstream, too. "Mills with a
million tons to fill are now nervous to make it happen. The
sooner the better," one buyer said.