Trade Resources Industry Views On-Going Supply Difficulties Continue to Support US Steel Sheet Pricing

On-Going Supply Difficulties Continue to Support US Steel Sheet Pricing

On-going supply difficulties continue to support US steel sheet pricing, though market sources were divided Monday as to whether a peak had been reached.

One large-volume hot-rolled service center buyer said there's "nothing out there" for less than $660/st, and he characterized the market as "radically tight."

He added that AK Steel had to take one of its Ashland, Kentucky, blast furnaces down temporarily for a portion of last week due to a taphole concern, an issue that was also raised by a source at a competing mill. AK Steel said it had no issues to report and would not comment on rumors.

A second buyer said buys at or over 500 st could probably be had at $675/st, but $680/st and up would be standard for smaller volumes.

At those prices, another base price hike is likely, he said.

"I think things are going to be in pretty good shape for several months," he said. "I've been fooled before, but things are moving out the door."

A source with a major automobile manufacturer said that he was watching his supply situation carefully due to mill shortages, while a third service center buyer said actual transactions may be sparse, but they are being done at elevated numbers.

"Prices are being quoted as published, but [I] suspect some orders are going through a little less," he said. "Not sure how many transactions are actually occurring, but they will have to, eventually, with lengthening lead times and low inventories."

A potential source of erosion, however, is large distributors who can still sell aggressively out of inventory or sacrifice their margins to capture market share, he said.

The sentiment was echoed by a fourth service center buyer, who said deals are being cut in "onesies and twosies" by re-rollers and minimills to keep their volumes up.

"I'm starting to feel the peak is getting a little old right now," he said. "I think things are starting to get a little more reasonable."

The buyer said he had not yet heard talk of a price increase, though it would not entirely surprise him.

"Some of this stuff is a little ridiculous, but it doesn't mean that the mills won't follow it anyways," he said.

Platts maintained its hot-rolled assessment at $660-680/st and its cold-rolled assessment at $790-800/st. All prices are normalized to a Midwest (Indiana) ex-works basis.

Source: http://news.chemnet.com/Chemical-News/detail-2290906.html
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US Steel Sheet Supply 'radically Tight, ' Peak Discussion Begins
Topics: Chemicals