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Steel prices could rise on supply disruptions

Keywords: Tags  steelmaker, hot-rolled, U.S. Steel, supply constraints, cold-rolled, Catherine Ngai

NEW YORK — A number of disruptions on the supply side may help U.S. steelmakers push prices higher, sources told AMM.

"If you’re looking for product off the integrateds and you don’t have a contract, you’re (short on luck)," one Midwest service center source said. "The bigger picture is that mills aren’t happy with the shortage. But, in the shorter term, it’ll probably push prices up, which is good for the mills. I wouldn’t be surprised to see a price increase anytime now."

U.S. Steel Corp. told customers in an April 2 letter that it was temporarily curtailing its blast furnaces and steelmaking operations at its Gary Works in Indiana due to ice conditions on the Great Lakes (, April 3). The announcement came just days after the Pittsburgh-based steelmaker had to temporarily idle a basic oxygen process shop at its Great Lakes Works in Ecorse, Mich., after a roof collapsed (, March 28).

Domestic mills seemed to process the news quickly, and at least two market sources indicated late April 3 that one mini-mill had already been quoting $1.25 per hundredweight ($25 per ton) higher and planned to issue a formal letter in coming days with even higher pricing.

Meanwhile, at least four customers said that some other mills have been late with orders, causing continued tightness in the sector.

"I’m starting to see a break in the monotony," a second Midwest service center source said. "I’m expecting an increase anytime now."

Hot-rolled sheet prices were unchanged this week at $32.50 per hundredweight ($650 per ton), with some sources on the East Coast and Gulf Coast indicating pricing closer to $32 per cwt ($640 per ton). Meanwhile, cold-rolled saw an uptick to $39.50 per cwt ($790 per ton) from $39 per cwt ($780 per ton) this past week.

One mill source indicated that as a result of the recent disruptions they will only sell product at the previously announced listed prices of $33 per cwt ($660 per ton) for hot-rolled and $39.50 per cwt ($790 per ton) for cold-rolled and coated. A second mill source underscored the tightness in the market.

However, a price increase may be abated due to increasing imports, particularly as March license data indicated arrivals of over 3.1 million tonnes, the highest figure in more than a year. Those imports, while not solely flat-rolled, may be enough to keep buyers from accepting the higher prices.

"For the mills, they’re absolutely justified in pushing the prices higher," one West Coast service center source said. "But look at all the imports coming in. I think the timing of a hike would have some legs, but it’ll probably be really short lived."

Others said that the move ahead will be one based on the right timing, particularly with the impending settling of ferrous scrap prices, increasing rumors of trade cases and the difficulty of convincing buyers that higher prices are warranted.

"We’re all now waiting for the other shoe to drop," said one trader, referring to the next step from the mills. "That could take form in any shape. For a price increase, the question is if scrap will (settle) first. And how much can you package (the outages) in a day or two without it looking too opportunistic."

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