CHICAGO Sheet prices are on the rise due to solid bookings despite flat to slightly lower scrap prices, Steel Dynamics Inc. (SDI) executives said, although one analyst questions the sustainability of current pricing levels.
"The sheet mill (in Butler, Ind.) is very strong. Obviously, there is some upward price momentum just recently," SDI president and chief executive officer Mark D. Millett said during the companys second-quarter earnings call July 22.
Hot band lead times are about four weeks, while those for coated products stand at roughly six to eight weeks, company executives said.
"Theyre basically full across the board," according to Richard P. Teets Jr., executive vice president of steelmaking and president and chief operating officer of steel operations, adding that the companys structural and rail division has a good backlog that is solid through July and three quarters of August.
Timna Tanners, senior research analyst at New York-based Bank of America Merrill Lynch, questioned whether current pricing might be sustainable, given that steel prices fell significantly less than ferrous scrap tags in the second quarter, adding that SDI might have benefitted from production problems at its integrated competitors.
But Millett brushed aside those concerns, noting that pricing for most SDI products is "stable to positive" despite expectations that scrap tags will be "sideways or edge down a few bucks" in the near term.
Meanwhile, market sources said domestic mills have been angling to increase hot-rolled coil prices by $20 to $30 per ton ($1 to $1.50 per hundredweight). Given that some mills had been offering steel at $33 to $33.50 per cwt ($660 to $670 per ton), the move could represent an attempt to set a floor of at least $34 per cwt ($680 per ton), they added.
No officials announcements have been made to date, according to market sources, who were divided on the reason for the quiet nature of the increase. Some speculated that mills might not want to be seen attempting to boost prices too soon after a positive ruling in an oil country tubular goods (OCTG) trade case (amm.com, July 11).