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Hot-rolled prices weaken on lower order outlooks in Feb.

Keywords: Tags  Hot-rolled coil, cold-rolled, galvanized sheet, prices, demand, imports, weather impact, Corinna Petry

CHICAGO — Winter weather is partly to blame for sluggish flat-rolled steel sales during the first week of February, service center buyers told AMM.

Spot prices, especially on hot-rolled coil (HRC), have frayed around the edges as a reflection of lowered order expectations, they said.

"We are buying what we need as needed," one large-volume Mississippi Valley buyer said. HRC producers "are willing to negotiate" on certain products—like waiving grade extras or offering a break on freight—"as long as they have a net number, like 34 cents ($680 per ton, delivered)."

These deals are for "small tonnages" that might fill a gap in a rolling schedule, and they do not apply to cold-rolled material, he said. Furthermore, such offers are on an inquiry basis. "You have to ask for it."

Just the same, "I don’t see a lot of price movement, not more than $20 per ton (all in)," he added.

One eastern Great Lakes buyer confirmed that the range of all-in flat-rolled pricing—including equalized freight in some cases and discounted grade extras in others—has moved down $10 to $20 per ton.

However, the circumstances under which a producer will go off list price are very specific and individual, he said, so buyers need not become overly concerned.

A western Great Lakes distributor source said his February order book is "down in the dumps" following a surge in January. Customers aren’t even ordering onesies and twosies, he said, but "quarters and halfsies."

Looking ahead, he worries about the opening of the navigation season, when steel imports will move through the St. Lawrence Seaway and up the Mississippi River. "My sources tell me we should be inundated with foreign material $30 to $50 per ton below domestic."

He, too, said there is slight downward pressure on hot band tags but not on cold-rolled or galvanized, as coating lines run more slowly in cold weather. Some galvanized producers have missed quoted deliveries.

A source at a pre-paint and coated sheet distributor agreed, saying there are "some shortages in cold-rolled across (certain) categories of widths and gauges." His order book reflects an "economy that is still struggling," on top of which "the weather is affecting a lot of things, like truck deliveries. If it’s not shipping, we can’t bill it," he said.

"We were hindered by weather in January and that is continuing," the eastern Great Lakes buyer said. "Even this week, we had to hold back trucks (due to heavy snow). There is a sort of malaise due to the weather." That, combined with perceived excess inventories and other factors, "is leading to hesitation of purchasing."

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