US sheet steel prices held steady Wednesday but buyers and sellers said that a report of low buyer inventories suggests that prices, which have been showing signs of weakness, could get support from a tight market.
The Metals Service Center Institute said that US service centers carried 2.0 months of flat-rolled supply at the end of January, down from 2.7 months in December and matching a recent low ratio seen in June 2016.
One service center source said he had strong shipments in January, and that even though shipments have slowed in February, he expects that business will accelerate in the next few weeks with the expected uptick in seasonal demand.
"With the service center inventories low, everyone is going to go back to the trough," he said, adding he expects prices to increase in the second quarter.
The service center source said he has not needed to buy lately. He saw hot-rolled coil at $620/st, but was not sure about cold-rolled coil. A mill quoted him $860/st, which he said was a shock. "I don't know anybody who bought at that level," he said.
Another service center source said he has seen sheet prices sliding a little, but with the service center inventory news and a possible uptick in scrap prices in March, he could see mills trying to gather what they lost since January and maybe $10/st more.
"I think you might see a little soft spot here but I don't think it's going to last long," he said. "Everything is too stable. Business confidence is strong." The second service center source said he was quoted a $800/st base for galvanized sheet substrate. Before he received this price, he was under the impression CRC and galvanized substrate prices were at $840/st. He said he did not need to buy galvanized sheet in the near term -- aside from some small orders to fill holes -- and he recently placed an order for imported material.
"The market started to slide two weeks ago and took a pretty big slide last week," a mill source said about large-volume orders. He said he would sell galvanized sheet substrate at $820-$830/st for smaller orders, though.
Low inventories and strong demand expected in March and April may be enough to turn around the pricing trajectory, the mill source said, and mills may even try to raise prices.
Another mill source said he has not sold any HRC below $620/st, and said he did not see any reason to take an order below $600/st. He said there was probably only one mill selling below $600/st. Spot transactions have been in the $620-$640/st range for HRC and $820-$840/st range for small orders of CRC.
The second mill source said he has not booked any large orders lately, but bookings, particularly contract bookings, have been steady.
The S&P Global Platts daily HRC and CRC assessments remained unchanged on Wednesday at $620-$630/st and $820-$840/st, respectively. Both assessments are normalized to an ex-works Midwest (Indiana) basis.
