NEW YORK Steel market participants are growing increasingly nervous about supply-side dynamics as a result of an ongoing outage at U.S. Steel Corp.s Great Lakes Works in Ecorse, Mich., with some saying the issue could lead to higher prices in the near term.
The outage, which market sources expect to last anywhere from two weeks to a month, comes at a time when the sheet market is seeing tightness that could lead domestic producers to push for another round of price increases.
"The market is relatively tight," one Midwest service center source said. "I dont know how much the U.S. Steel issue will affect the overall market, but Im fully expecting mills to come out with an increase because they can now. The mills are busy and the service centers are busy."
The Pittsburgh-based steelmaker temporarily suspended Ecorse operations last week after a collector main collapsed onto the roof of a basic oxygen shop (amm.com, March 28).
"We continue to work on the repairs at Great Lakes Works following the incident last week," a U.S. Steel spokeswoman said. "In the meantime, we are in contact with our customers in an effort to minimize the impact on their operations."
A source at a competing mill and two buyer sources indicated that the steelmaker had been quiet about the expected duration of the outage. But one trading source indicated that even if the Great Lakes Works outage is temporary, it may have enough "psychological impact to move (prices) up."
The competing mill source underscored that the market has been firm, adding that "lead times are moving out fast and the last increase went in with no problem so it will probably happen (again)."
On the scrap front, decent demand at other Detroit mills will absorb the tons earmarked for Great Lakes Works, according to scrap suppliers. The mill uses a lot of cut grades like plate and structural and heavy melting scrap. Cut grades have been tight, and finding homes for the material will not be an issue since many mills have been struggling to secure this type of scrap.
"Scrap demand is strong enough in the Ohio Valley that if the local market (Detroit) doesnt compete they will lose tons from our corridor," said a Midwest scrap supplier to these mills.
The Ohio market is the best sellers market in the country. The Youngstown market settled up $25 per ton April 2 due to supply concerns.
Other steel players, though, said that with healthy demand, an uptick in raw material costs and good order books, a higher positioned market seemed reasonable.
"Flat-rolled is flying off the shelf here," a Northeast service center source said.
The Great Lakes Works produces hot-rolled, cold-rolled and coated sheet steel for the automotive industry.
Lisa Gordon, Pittsburgh, contributed to this report.