NEW YORK Big spreads between U.S. and world steel prices must eventually correct, according to U.S. distributors.
The differentialssuch as the more than $280-per-tonne spread between domestic and Chinese hot-rolled coilcannot be sustained indefinitely, distributors said during a panel discussion at the Steel Success Strategies XXIX conference in New York sponsored by AMM and World Steel Dynamics Inc. (WSD).
The difference is "too large not to get serious about," James Barnett, president of Wixom, Mich.-based Grand Steel Products Inc., said in reference to a $287-per-tonne gap between domestic and Chinese hot-rolled band reported by Peter Marcus, managing partner of Englewood Cliffs, N.J.-based WSD.
Barnett, who suggested that several of his counterparts were buying more imports, noted that price spreads between some foreign and domestic sheet were more significant than others.
"Im not so concerned about hot-rolled, but cold-rolled numbers are very profound," he said, citing also the problem of getting domestic steel delivered "on a timely basis."
Chinese cold-rolled prices delivered to the U.S. West Coast have been reported at more than $120 per tonne below domestic tags.
However, big spreads between domestic and imported flat-rolled material have not convinced Lisa Goldenberg, president of Fort Washington, Pa.-based Delaware Steel Co., to load up on imports. "Its not justified," she said, pointing out that unsold, speculative tonnage is not arriving in U.S. ports at the same rate as in the past following domestic price increases earlier this year.
Afshin H.S. Khiabani, president of Toronto-based Ferogen Inc., also thinks North American prices appear stable and have probably peaked, adding that the volume of steel imports is not as significant as rising imports of downstream products. "Its not Chinese wire rod, but products made from wire rod" that concerns him, Khiabani said.
Still, James Tumulty, chief executive officer of Pittsburg-based merchant bank Calibre Group LLC and chairman of Piqua, Ohio-based distributor Miami Valley Steel Service, thinks spreads such as those between domestic and Chinese steel "cant not correct in some way."