NEW YORK Steel sheet
prices softened this past week as market participants continued
to cite overcapacity and too many players chasing too little
business as top concerns.
"Market prices are really bad.
Theyre so low right now, and scrap prices keep retreating
at the same time," said one mill source. "Things are tough, and
I dont think anyone is making money. Its a real
tepid situation, and there are few positives out there. We want
to keep prices up, but we have play within the market to do
Steel sheet sources had said in
early May they thought prices might have hit a floor,
particularly as a number of Midwest mills were said to be
planning outages in the coming months (
amm.com, May 6).
But despite earlier
expectations, a pricing floor has not yet materialized, with
both buyers and sellers reporting lower transaction prices in
recent days. Hot-rolled band prices fell this past week to
$28.50 per hundredweight ($570 per ton) f.o.b. Midwest mill,
down from the prior weeks prices of $29 per cwt ($580 per
ton). Buyers said they were able to get as low as $28 per cwt
($560 per ton) for larger tonnages in the Midwest, while
sources in the South reported prices at the same level for even
Sources attributed the multiweek
slide to overcapacity in the marketplace at a time of stable
demand, causing both mills and distributors to be increasingly
aggressive when it comes to securing orders.
"Were seeing a slight
uptick in business. But all our new orders are because
were taking it from other people like us. Were
winning and theyre losing. There will be times when they
take away from us," said one Midwest service center source.
"Theres nothing new in the marketplace that can get
anyone excited. Overcapacity is still overcapacity. Someone has
to say, Hey, we have to stop. But no one is going
to do it."
Many reaffirmed that volumes,
while lower than at the same time last year, have been steady.
But with mills said to be hungry, deals are still being made in
order to fill order books.
"People are pushing for lower
numbers, and some mills are lowering (them)," said a second
mill source. "From a volume standpoint, theyre what we
expected. From a price situation, our competitors keep driving
down the numbers. Frankly, a lot of mills are underwater when
you look at their financial results."
Lead times also remain short,
keeping cautious buyers on the sidelines.
"We had a mill produce for us
within a week, and when lead times are that short, it means you
dont have business," said a second Midwest service center
source. "Mills want to look for an increase, but if someone
said were going up $40 a ton, no one would believe it.
Theres no impetus; theres no reason. With
whats been going on, mill lead times are trumping
Buyers added that they expected
an improvement in the second quarter as a result of a delayed
seasonal uptick usually seen in the first quarter, although
that still remained to be seen. While some said they expected
the second half of the year to improve, the combination of
squeezed margins and too much steel in the marketplace seems to
be hampering prices on the upside.
"Everyone is hoping things pick up in the second half, but I
dont see anything out there that gets me excited about
going forward," the first mill source added.