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  • Hot-rolled sheet steel prices flat for second month

    Demand remains weak so fourth quarter price rise is doubtful

    Tom Stundza -- Purchasing, 10/28/2009 3:50:11 PM

    Hot-rolled steel sheet price hike slowsSheet steel prices have gone into a funk this month as continued weak demand has crimped orders. Benchmark grade hot-rolled sheet is selling this week in a range of $532-$537/ton, which supports the $535 monthly average developed from Purchasing's October buyers' survey (and available for sale at Purchasindata.com). Actually, hot-rolled sheet has stalled at $535 for the past two months after jumping from the cyclical nadir of $380 in June.

    Commentary from various steel mills and large service center chains discussing fourth quarter outlooks says demand for steel is muted amid the continued downturn in manufacturing and construction. This has held down prices since buyers have refused to pay what the mill shave been posting. Analysts now say recent increases in the rates at which mills are running have been an overreaction to customers, mostly distributors, who replaced inventory last quarter rather an indication that demands has increased among manufacturers.

    Earlier last quarter, steel orders improved from historically low levels earlier in the year, helped by rising demand from the auto industry trying to boost manufacturing to replace cars junked in the "Cash for Clunkers" program. However, demand from the automotive and auto parts sectors appears to have slowed this month. So, the market for steel continues to pale in comparison to levels seen during much of last year.

    U.S. Steel CEO John Surma says orders have dropped in North America in recent weeks, partly due to seasonal slowdowns at factories. In a conference call with analysts, he says "demand trends remain uncertain as both the U.S. and global economies struggle to recover." The company now plans to idle two blast furnaces - one at its Gary Works in Indiana and one at its Granite City Works in Illinois - to adjust for weaker demand. Meanwhile, David H. Hannah, CEO of leading metals distribution company, Reliance Steel & Aluminum, tells analysts "he is uncertain as to business activity in the 2009 fourth quarter (since) demand is fairly stable at low levels (and) the fourth quarter is typically seasonally slower." He adds that "there may be some slight downward pressure on pricing for many of our products in the coming months."

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