NEW YORK Squeezed margins, lackluster demand and oversupply issues continue to plague the domestic steel sheet market, sources said, noting that either a significant demand boost or a major production outage will be necessary to trigger a turnaround.
"People cant survive like this forever. Things will continue until capacity comes offline," one Midwest service center source said. "The industry is in need of a shot in the arm from demand. Things have been so flat for the last five to six months that everyone is now begging for some fluctuation."
AMMs steel sheet prices started the quarter at around $32 per hundredweight ($640 per ton) f.o.b. Midwest mill but are now holding at around $29 per cwt ($580 per ton) after multiple weeks of declines.
Most sources maintain that the uptick they expected at the start of the year has yet to materialize, although some said business levels do look slightly better than last month.
"The market is really slushy and muddy because there are still too many players chasing too few orders," a second Midwest service center source said. "Business hasnt been terrible, but its definitely softer than quarter one of last year. April has been tremendous for us, though, but the bottom line is the difference between production and consumption."
But even for those service centers that have reported a slight uptick in business, most say its too early to say whether the apparent boost has any staying power.
"Were just getting by day to day. One day, its kind of busy, and the next day, its not. Its just crazy," a Southeast service center source said. "The numbers are cheap, and when the numbers are that cheap, its because theres no demand. Unless some of these tons are taken off the market, its going to stay this way unless the economy gets way better. But the way things are now, this year is looking ugly."
In recent earnings calls, executives at AK Steel Corp., Nucor Corp. and Steel Dynamics Inc. said that the U.S. sheet market outlook remains weak, particularly as the lack of a seasonal uptick has hurt bottom lines.
"At this point, its pretty simple: theres no business," a Northeast service center source said. "No one is rushing to place orders. People are saying, Whats going on? Its pretty darn scary at this point. Volumes are OK, but our margins are really squeezed."