NEW YORK Steel sheet prices may be nearing bottom, industry sources said, but the timing will have to be right for mills to successfully raise tags.
Hot-rolled and cold-rolled sheet prices have slipped since the start of the year on increased import activity, a lack of buying due to cold weather and falling raw material costs. However, with increased chatter in recent days over a potential price increase and possible pent-up demand in the spring, there could be opportunity on the sell side.
Business is good and Im not hearing anything out there thats negative, one Midwest service center source said. Im expecting to see a price increase before April 1 because mills will want to take advantage of the pent-up demand out there as well as setting a floor.
Prices remained steady this past week, with hot-rolled sheet holding at $31.25 per cwt ($625 per ton) f.o.b. mill Midwest, although some sources indicated larger tonnages were possible at $31 per cwt ($620 per ton). Cold-rolled sheet fell to $37.50 per cwt ($750 per ton) from $37.75 per cwt ($755 per ton) previously.
Participants along the supply chain have increased discussion in the past week over a potential price increase, although it was unclear how much resolve mills had to raise tags, particularly having to justify falling raw material costs and a weak order book with higher prices.
The mills are talking up a price increase and the discussion is clearly out there, one trader said. But you would need a large mill to lead it, and with scrap falling this month I think it would be too early to do it right now.
However, some sources said there is little room left for sheet prices to fall, noting that business conditions have been good and a rebound is inevitable once the weather warms up.
Were hearing about a lot of activity going on out there, a second Midwest service center source said. The mills are telling us they believe were very, very close to a low. Im expecting that well hit a low by the end of the month. This means were starting to buy and get our inventory in line.
The direction of iron ore and ferrous scrap prices will be important, but service centers and distributors emphasized that much of the potential pickup would depend on the strength of the nonresidential construction sector. If demand kicks in, prices will go up no matter what scrap does, the second source said.
Others, however, continued to indicate that some market data is disconcerting, particularly as razor-thin inventories and buyer hesitancy continue.
Im concerned that we havent gotten a good read on the economy because of the weather, a Mid-Atlantic service center source said. Weve lost shipping days in January, February and March because of the stupid snow. We think things are getting better but the numbers dont prove it.