WASHINGTON Just weeks
after the latest round of steel sheet price hikes were
announced, service centers said that deals are inching back
into the market, which could cause another possible slide in
prices in the near term.
"There are thousands and
thousands of tons in the market right now, and we just have too
much capacity," a Southeast service center source said. "These
increases just arent holding. The mills tried very hard
to establish higher numbers, but buying hot-rolled black is
just like buying a box of crayons. Everyone is making it. I
dont have faith in it anymore."
Mills have tried to boost sheet
prices twice since the start of the year, resulting in a
perceived $90- to $100-per-ton ($4.50- to $5-per-hundredweight)
increase. While market participants quickly expressed doubt
about the first increase, they said the second appeared to have
momentum, especially as it underscored rising raw material
costs and an expected seasonal uptick in the spring.
But those sentiments have given
way to skepticism in the past week, with service center sources
telling AMM that lower deals were being made,
resulting in no change in price from before the increases.
"Things are OK, but theres
no pickup in business. Im not sure there is anyone who is
going to convince me its going to change," an East Coast
service center source said. "The problem in the marketplace
right now is that mills are so hungry for any order they can
getand I dont blame them. Unfortunately, none of
the perceived pricing is being held. I dont believe a
single price announcement (since January) has stuck."
Hot-rolled band prices were
steady last week at $620 per ton ($31 per cwt) f.o.b. Midwest
mill, but this week prices have inched down to $610 per ton
($30.50 per cwt), with some reporting that deals around $600
per ton ($30 per cwt) were starting to become possible at
certain mills for larger tonnages.
Much of that sentiment, sources
said, is due to continued short lead times, causing buyers to
doubt any pickup in activity. Sources also continued to
emphasize that overcapacity in the marketplace needs to
fundamentally change before prices can stabilize.
"The only way things will get
better is if someone takes off capacity. Theres just too
much steel," a Midwest service center source said. "Lead times
refuse to extend. No one believes in keeping an inventory
anymore. We dont think prices will go up from where they
Looking forward, some sources
said mill prices will face continued downward pressure.
"Any little bump we had is
pretty much gone now. I dont think the mills could hold
it up with lead times being so short," a second Midwest service
center source said. "Thank God scrap went up this month, or
there wouldve been zero momentum behind the last
increase. But now people are talking about scrap being down
again in April."