Second round of flat-rolled steel hikes begins

NEW YORK — At least two major domestic steel mills have increased published sheet prices in a move that market players expect will gain industrywide support.

ArcelorMittal USA LLC, Chicago, on June 13 announced new minimum base prices of $630 per ton ($31.50 per hundredweight) for hot-rolled coil and $730 per ton ($36.50 per cwt) for cold-rolled and galvanized product effective immediately, according to a letter to customers. The company didn’t list its previous price in the letter, but AMM’s current spot price for hot-rolled sheet is $595 per ton ($29.75 per cwt) vs. reported lows of around $550 per ton ($27.50 per cwt) in May.

AK Steel Corp, West Chester, Ohio, also announced a minimum $40-per-ton increase in all spot market carbon flat-rolled steel base prices effective immediately with all new orders.

Other mills were widely expected to mirror the move, which comes just three weeks after a first round of price hikes announced in late May (, May 23).

There have been rumors for several weeks that domestic mills would attempt a second round of increases. While much of that first hike reportedly gained momentum, bringing some buyers off the sidelines in an effort to replenish low inventory levels, this second hike is expected to gain further traction—or at least help solidify the previous hike, buyer and mill sources said.

"Believe it or not, this is a good move on the mills’ part. For the last increase, the mills got some momentum and got the ball rolling to take some guys off the fence," one Midwest service center source said. "People were sitting out and saying they could wait. But with another round, it’s even going to move more folks off the fence."

A number of sheet buyers pointed out that business conditions have remained stable or even seen a slight uptick, which is helping to sustain the higher pricing levels.

"Auto is ramping up and not down. We have lower inventories than we’ve ever had. There are some production issues going on at different mills. All of this is indicating that prices will go up," a second Midwest service center source said.

Others, though, said that while an uptick is plausible, the window for higher prices might be a narrow one.

"I think the mills will get those higher prices in the next 60- to 90-day window, but I wouldn’t get too excited about it," one service center source in the South said. "There’s a little tightness in the market, but it’s based on a bunch of circumstances. I don’t 100 percent believe that we’re in a sustained rally."

They added that with higher domestic prices, that might be enough to entice imported steel to re-enter the market at higher volumes, which would effectively drive domestic prices lower.

"At the end of the day, the question is will this stick? Sure, it can for a certain period of time. But it can’t stick for long as long as the price they’re asking for is higher than world prices," a third Midwest service center source said.

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