NEW YORK The U.S. flat-rolled steel import market is surprisingly quiet, and the outlook for the first quarter doesnt look any better, traders say.
"We have this interesting scenario right now. No one wants to buy anything, activity is slow, and from everyone that I talk to, they feel like the pricing in the market is softening a little bit," one trader said. "Lead times are short, not many deals are being made, yet everyone is raising prices. The whole thing doesnt make sense to me right now."
While traders said business in the first half was stronger, import statistics show that figures have since been on a steep decline. Some 2.37 million tonnes of steel are licensed for import for November, down from preliminary imports of 2.85 million tonnes in October, according to data from the Commerce Departments Import Administration.
Much of that decline is due to slack demand, buyers unwillingness to stock up on inventory and an uncertain fiscal climate, sources said.
"To be honest, theres still no real beacon of light thats encouraging to us right now," a second trader said.
A number of domestic mills last week raised sheet prices by some $20 to $30 per ton, marking the third such increase for the fourth quarter (amm.com, Dec. 6).
Moving forward, trading sources say that business will depend on how disciplined mills are in keeping prices up.
"Its been a little quiet in December. Its hard to say how the future looks. If the mills keep their production down, and if the scrap moves up in January, well, well see how far we can push this," a third trader said. "Theres too much steel. On the margin, if mills keep the prices up, theyll suck in more foreign."
Hot-rolled sheet imported to the Port of Houston is transacting at $565 to $600 per ton, sources said, although volumes remain low. This compares with domestic prices of about $640 per ton f.o.b. Midwest mill.
Cold-rolled sheet to the Gulf is transacting slightly higher at $700 to $$720 per ton, sources said, noting that Chinese steelmakers have hiked prices in recent weeks. This compares with domestic cold-rolled sheet prices of $740 per ton.
Buyers point out that the lack of business could be caused by potential tax hikes in the coming year.
"I think a lot of the uncertainty comes from the Feds and whats going to happen with the fiscal cliff and all. Are they going to sit down and be men and settle this thing, or will they just sit there and destroy what they have?" one buyer said. "Things are OK, but most people I talk to are complaining about this or that. I think a lot of it goes back to 2007 when things were good. Now theyre expecting that to be the norm and they just arent realistic."
Plate imports have also suffered, and while sources said it was a stronger product several months back, sales have also been difficult.
"Business has been flat and I think thats been the condition all along," a fourth trader said. "Everyone is being very conservative right now. Plate is the worst product."
Imports of medium plate to the Port of Houston were transacting at $710 to $740 per ton vs. domestic prices of $720 per ton f.o.b. Midwest mill. Meanwhile, heavy plate import tags held steady at $850 to $900 per ton.
And while it might be too early to tell if prices are sticking, traders said the increases might spark some short-term buying.
"If you look at this thing (prices sticking), God, havent we seen this movie once or twice now?" the first trader added. "Something has got to give. Mills are betting customers held out and need to buy and hoping guys will blink. And customers are thinking they can out-wait the mill. In the meantime, were all on our hands and knees."