demand for special bar quality (SBQ) products has not proven as
stable as many buyers and sellers had hoped, with a number of
sources reporting reduced turns and hours of production at some
mills due to less-than-robust order books.
"Our order book is slow.
February was way off and March, too, from last year to
somewhere between 2009 and 2010 levels," said an upper Great
Lakes buyer. "That is in spite of automotive demand, improved
housing starts and a rising stock market."
A source at a national bar
distributor confirmed the apparent slowdown. "(Some mills) cut
production a turn or two, and some hours, to create more
backlog," he said. "Theyre cutting overhead because
business is not good. If they had an order book, they would not
cut turns and hours."
Some market participants were
more optimistic about the market for hot-rolled and
cold-finished bar in the first few weeks of 2013, noting an
uptick in shipments and slightly extended backlogs (
amm.com, Feb. 15). But once the supply chain
replenished empty shelves, activity slowed, according to
"End-users are keeping it tight.
They arent overinventoried; they are just overconcerned.
If they had better optics on their own business, they would be
more comfortable," one national bar sales manager said.
Although many market players
have reported strength in the automotive sector in recent
quarters, SBQ players say the slowdown in other sectors is
largely offsetting that strength.
"We certainly could use a lot
more business. Automotive is doing well but it doesnt
lead the whole country anymore," a second Great Lakes processor
In fact, demand from nearly all
other manufacturing sectors remains flat, the national bar
distributor source said. "A lot of OEMs (original equipment
manufacturers) are looking for orders themselves."
A source at an East Coast
distributor agreed, noting that his customers "arent
looking to the future. They are looking for today, living hand
to mouth to keep costs down as much as possible."
With demand down slightly,
sources are reporting slightly lower transaction prices as
well. Spot prices for hot-rolled bar, 1000-series, 1-inch
rounds have dipped slightly to an average of $858 per ton
($42.90 per hundredweight) f.o.b. mill this month from $860 per
ton ($43 per cwt) in mid-February. Cold-finished Grade 1018 bar
prices slipped slightly more, easing to $1,205 per ton ($60.25
per cwt) from $1,216 per ton ($60.80 per cwt) in the same
But that trend could reverse if
mills announced scrap surcharge increase for SBQ products
takes hold. Nucor Corp., Charlotte, N.C., appeared to lead the
move, announcing in a letter to customers this past week that
it will raise its surcharge by $43 per ton ($2.15 per cwt),
effective with shipments April 1, based on an increase in
AMMs consumer buying price for No. 1 busheling
scrap in Chicago (
amm.com, March 12).
The East Coast distributor
source, for example, said he expects to build stocks ahead of
the April surcharge increase.
But the national bar sales
manager said that hasnt been the case just yet. "We saw a
little life in February and hoped that March, with surcharges
upwe anticipated those earlywould bring more
orders, but it doesnt seem to have done that," he