Steel Buyers Reflect on Price Increases & Section 232

Lead times have moved with buyers reporting some mills moving to an inquiry only basis on some products. Here is a comment made by one service center executive regarding ArcelorMittal, “Mittal advised they filled July and now into late August. Others now have late July at earliest, at least that I’ve seen. Easily seeing 4+ weeks move out in the last week since price announcement.”

A steel buyer associated with another service center told us, “I have heard booking activity is heavy and most mills have moved out at least two weeks.” They told us their company was moving away from some of their foreign purchases and opting for more domestic steel “even though the sales guys are screaming.”

A steel buyer in the south told us of speaking to Steel Dynamics (Columbus) and was told the mill had a solid order book since the price announcement. As of this morning SDI Columbus was re-evaluating lead times on hot rolled and they were not able to provide a lead time for any new orders. At the same time, they reported cold rolled lead times and CR base galvanized as being out to the week of 7/17 (6 weeks). Painted galvanized and Galvalume were being quoted for the week of 7/31 (8 weeks).

From a manufacturing company in the south we heard, “I haven’t been able to get them to budge [off the $30/ton price increase].  I am hearing they are collecting the full $30/ton.  Maybe not with large tonnage but with up to 500 tons it is holding.”

From an automotive related service center we got, “Mills are holding firm at this time, however they are not receiving larger orders just what people have to have.” The continued by telling us that the mini-mills steel have “reasonable” lead times while the integrated mills were much longer.

A Southern based service center told us, “I think there is still a little wiggle room on CR and galv, but things are definitely tightening up in the mills’ mind. HR-$31 on small tons. CR – $39. Galv -$38. Which are all up about $30.”

Section 232 On Everyone’s Lips

“Up to now, there’s been less concern in the buying community regarding Section 232 than I have expected, especially the farther down the supply chain one gets. Perhaps it’s because it’s such a wide-open scenario, and does have inherent complexities. I believe that the 232 outcomes will be onerous and that we will be in for pretty volatile period ahead….” Service center general manager

A large service center in the Midwest told us, “Seems the whole country is monitoring the Section 232 rulings. Has the potential to change domestic pricing very quickly. It’s already had an impact on foreign offers. The traders have been behaving strangely since the Memorial Day weekend.”

A very large service center with large contracts told us, “We are trying to place our contract tons further out due to the expectation of longer lead times upon the 232 announcement. If our industry acts like it has historically, most will overreact and create some chaos. Hoping calm heads prevail after 232 is announced.  We believe it will take weeks to decipher exactly what the ramifications of the 232 announcement will be and what the real impact will be by product.”

A manufacturing company told SMU, “We are restocking inventory to carry more onhand expecting we have hit the bottom; with Section 232 and NAFTA renegotiations looming we expect prices to continue to go up.”

An Upper Midwest service center said, “Mills are definitely trying to toe the line.  We believe no true clarity until 232s announced. With that being said, our bet is that it is a positive ruling [in favor of the steel mills] which will result in higher pricing. To that end we bought 30k tons in advance. Trading companies seem to be “frozen”.  No idea what to recommend to their customers.”  

A manufacturing company was concerned about the potential “bleed over” into the finished product markets, “We buy mostly melt and manufactured USA, so we will pass the cost along to those companies. We are just educating our business leaders on the potential impact, we are most concerned about if this 232 bleeds over to finished or semi-finished product.”