Steel sheet spot prices down again

NEW YORK — Steel sheet prices softened this past week as market participants continued to cite overcapacity and too many players chasing too little business as top concerns.

"Market prices are really bad. They’re so low right now, and scrap prices keep retreating at the same time," said one mill source. "Things are tough, and I don’t think anyone is making money. It’s a real tepid situation, and there are few positives out there. We want to keep prices up, but we have play within the market to do business."

Steel sheet sources had said in early May they thought prices might have hit a floor, particularly as a number of Midwest mills were said to be planning outages in the coming months (, May 6).

But despite earlier expectations, a pricing floor has not yet materialized, with both buyers and sellers reporting lower transaction prices in recent days. Hot-rolled band prices fell this past week to $28.50 per hundredweight ($570 per ton) f.o.b. Midwest mill, down from the prior week’s prices of $29 per cwt ($580 per ton). Buyers said they were able to get as low as $28 per cwt ($560 per ton) for larger tonnages in the Midwest, while sources in the South reported prices at the same level for even normal-sized buys.

Sources attributed the multiweek slide to overcapacity in the marketplace at a time of stable demand, causing both mills and distributors to be increasingly aggressive when it comes to securing orders.

"We’re seeing a slight uptick in business. But all our new orders are because we’re taking it from other people like us. We’re winning and they’re losing. There will be times when they take away from us," said one Midwest service center source. "There’s nothing new in the marketplace that can get anyone excited. Overcapacity is still overcapacity. Someone has to say, ‘Hey, we have to stop.’ But no one is going to do it."

Many reaffirmed that volumes, while lower than at the same time last year, have been steady. But with mills said to be hungry, deals are still being made in order to fill order books.

"People are pushing for lower numbers, and some mills are lowering (them)," said a second mill source. "From a volume standpoint, they’re what we expected. From a price situation, our competitors keep driving down the numbers. Frankly, a lot of mills are underwater when you look at their financial results."

Lead times also remain short, keeping cautious buyers on the sidelines.

"We had a mill produce for us within a week, and when lead times are that short, it means you don’t have business," said a second Midwest service center source. "Mills want to look for an increase, but if someone said we’re going up $40 a ton, no one would believe it. There’s no impetus; there’s no reason. With what’s been going on, mill lead times are trumping everything."

Buyers added that they expected an improvement in the second quarter as a result of a delayed seasonal uptick usually seen in the first quarter, although that still remained to be seen. While some said they expected the second half of the year to improve, the combination of squeezed margins and too much steel in the marketplace seems to be hampering prices on the upside.

"Everyone is hoping things pick up in the second half, but I don’t see anything out there that gets me excited about going forward," the first mill source added.

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