Sheet steel prices to drop
By Tom Stundza -- Purchasing, 11/1/2006 8:47:00 AM
The average spot price of hot-rolled sheet in coil in the third quarter was just under $630/ton. And buyers can expect to see lower prices because of rising steel inventories amidst slowing economic growth. U.S. Steel’s CEO, John Surma said in the company’s earnings report this week that average realized prices and shipments of flat-rolled steel will decline this quarter. Surma predicts a downturn in U.S. Steel’s profit during the current quarter. That’s why the company may idle three or four of its blast furnaces for the remainder of the year. Note: Strong economic growth has fueled steel demand and historically high prices for nearly three years. But last week, the Commerce Department reported the economy expanded at an inflation-adjusted annual rate of 1.6% from July through September. Purchasingdata.com has forecast $585 as the fourth-quarter average. Analyst Chuck Bradford at Bradford Research in New York also has been hearing of $560-$600 as the new market price for the fourth quarter. CIBC World Markets’ current hot-rolled-sheet price forecast for 2007 is $550/ton. Analyst Mike Willemse in Toronto expects hot-rolled sheet prices to decline $10 in November, $20 in December and another $20/ton in January to bring pricing to approximately $550/ton in the first quarter. This is lower than the $565 forecast by Purchasingdata.com but is based on his assumption of some seasonal strengthening in demand in the first quarter and lower import activity.
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