Sheet steel prices are falling
By Tom Stundza -- Purchasing, 10/4/2006 9:22:00 AM
Steel industry pricing conditions “are beginning to weaken due to excessive inventories in the hands of the customers,” reports analyst Charles Bradford at Bradford Research/Soleil Securities in New York. “All the major trade groups that track steel prices report a decrease in recent weeks (and) costs are also falling very fast, especially steel scrap and natural gas.” This supports the latest Purchasingdata.com finding that mills are trying to hold the cold-rolled sheet in coil ex-mill price at $740/ton but are being as unsuccessful as they are in keeping hot-rolled sheet in coil above $620/ton.
Bradford points out in a recent report that:
• Service center (warehouse) inventories remain excessive and tonnage inventories have been increasing every month since last November.
• Flat-rolled steel prices probably peaked in July. The major mills have been holding their prices but smaller mills have been discounting over the last two months.
• Steel imports have remained high. Even if indications are true that imports could have dropped somewhat in September, they likely will rise again in October.
He also says that due to the high steel inventories (and lower scrap prices lately), “some steel users have pulled orders for steel and expected steel prices to drop.” Note that cold-rolled prices have fallen $20/ton to average $705/ton in September, according to buyers who pinned the slide on expanded supply rather than collapsed demand. And now, new buyer surveys show that orders have been marginally weaker lately from excess supply—with hot-rolled sheet this week under $600 and cold-rolled sheet below $700.
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