Strong domestic mill pricing appears to be filtering, slowly but surely, through the supply chain, market sources said Tuesday.
Service centers have no choice but to increase their pricing for end-users, though realized prices are still probably about $30-40/st less than ideal, said one service center source.
"It's the end-users who can afford this the most," he said. "It's shifting the paradigm. As long as the mills keep that line drawn in the sand, service centers are going to have no choice but to raise their prices."
That leverage is likely to continue regardless of service center margins, said a second buyer.
"We are balking to no avail," he said. "[We're] fighting hard, but the leverage seems still to be in their hands."
A third buyer, however, said low domestic inventories across the board have aided him in passing along his increased costs.
"We're getting our numbers," he said. "If we don't, we're not selling."
Domestic pricing strength is also pushing up import offers, though spreads remain attractive, sources said.
One importer said the domestic/import price spread and lengthy domestic lead times have been spurring material orders at "record" pace, and some oversupply concerns are emerging.
A second importer, however, said the actual numbers might be overblown and even partially driven by an increase in real demand.
"I think there is an increase in imports, but I'm not convinced it's as much as people think or fear or have concerns that it might be," he said, adding that import offers remain very competitive but are steadily rising in tandem with domestic prices.
Platts held its hot-rolled coil assessment to $690-700/st and its cold-rolled coil assessment to $810-820/st. All prices are normalized to a Midwest (Indiana) ex-works basis.
