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Sheet market mixed on price direction

Keywords: Tags  steel sheet, hot-rolled, cold-rolled, steel buyer, U.S. Steel, Nucor, steel imports, Catherine Ngai


NEW YORK — Market participants are mixed over where flat-rolled prices will settle after a round of increases late last week, with buyers and sellers expressing uncertainty on how long the market will remain tight.

Of concern is how much the tightness in the market is a direct result of an outage at U.S. Steel Corp.’s Great Lakes Works in Ecorse, Mich., and a lack of raw materials at the Pittsburgh producer’s Gary Works in northwest Indiana. In what is described as a precarious dance between mill and buyer, many are still struggling to find out where the new prices, which are generally agreed to be higher, will settle.

"We know the tightness is a supply effect. There’s a lot less steel out there, so logic says it’s much tighter," one mill source said. "The market has been a little slow to react, though, and it could be that some just aren’t feeling the pinch yet."

Charlotte, N.C.-based Nucor Corp. initiated a fresh round of price increases last week, setting hot-rolled tags at $34.25 per hundredweight ($685 per ton) and cold-rolled and galvanized at $40.75 per cwt ($815 per ton), a move followed by several other mills (amm.com, April 4).

While some of the larger mills have yet to publicly announce increases, sources indicated that a lack of spot availability, supply disruptions, a busy automotive schedule and mills trying to play catch-up after a difficult winter season have contributed to higher pricing.

AMM’s hot-rolled coil price moved to $33.50 per cwt ($670 per ton) this week from $32.50 per cwt ($650 per ton) previously, while cold-rolled moved to $40 per cwt ($800 per ton) from $39.50 per cwt ($790 per ton).

"There’s fresh panic out there to buy because not a lot of people bought stock at the $31-(per-cwt-number) previously. Who thought that the thickness of ice would contribute to pricing going up?" one northern service center source said. "I think this will probably last six to eight weeks because of the ripple effect. But pricing is probably on the high side relative to pricing globally."

Some on the bullish side expect the market to continue upward, particularly with demand picking up and certain mills still out of the spot market for some time.

"Right now you can’t get steel unless it’s for June, and people are getting nervous," one Midwest buyer said. "Pricing is continuing to go higher and there are huge backlogs. Businesswise, we’re swamped and everyone is swamped. I’m very optimistic and I think we’ll have a good run."

Two Midwest buyers indicated that certain products had to be rescheduled or were being stalled due to delays from integrated mills, which have caused them to scramble for tons to fill their order books.

Other sources indicated that buyers had no choice but to accept the higher numbers due to lean inventory levels, adding that spring demand will pick up with the cold first-quarter coming to an end.

"Bookings have been real good ... but of course, there are people who are continuing to be skeptical and nervous about where pricing will land," a second mill source said. "The problem is that buyers will have to make a decision that with the longer lead times and no one heavy on inventory, things are going to go up for a while. Even after the supply issues are resolved, it will take time for everyone to catch up. This isn’t just some quick spike—it’s got underlying business attached too."

So-called pent-up demand might be overblown, others said, particularly as competitive imports head to U.S. shores in the late spring and early summer, with hot-rolled priced between $27 and $29 per cwt ($540 and $580 per ton) c.i.f. to the East and Gulf Coasts. The concern also is that things might slip quickly if any of the end markets slow down, particularly end markets dominated by the integrated producers.

"I believe this escalation of pricing will be completely done in three weeks," one West Coast buyer said. "It may then flatten out for a couple of weeks and then it’ll fall. Simply put, with all this cheap imported material there’s no way in hell the mills can push it up to $700 (per ton). With no orders coming in, the mills are going to have to catch up. I’m also worried that if automotive sales don’t skyrocket, this market will slip."

Others noted that while business is fine, it isn’t enough to support the higher numbers, indicating that business could drop quickly once the supply disruptions are done.

"Business isn’t all that strong for us," one Northeast service center source said. "We’re seeing the national chains in the service center business chasing the small and stupid orders. That tells me something is up."


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