Sheet Steel Market to Plateau in 2008
WASHINGTON — Construction managers and facility planners can expect sheet steel prices to plateau this year at a new, higher level, according to a recent survey.
Analysts with Purchasing.com project the price of hot-rolled sheet steel to reach $1,120 a ton by fall 2008, after a 45 percent cost hike mid-year.
Drivers for the projected cost increase include high offshore prices, the flagging U.S. dollar, lowered imports, low inventories and an increase in scrap and other input costs, the survey states.
The steel market has experienced unprecedented increases since November 2007, resulting in a downturn of demand in the U.S. market. Purchasing planners and service center buyers reported a decrease in sheet steel sourcing in the second quarter of 2008, according to the survey.
Nearly two-thirds (66 percent) of businesses polled say they do not plan to buy much steel through September. U.S. companies are only purchasing for their immediate requirements, with service centers maintaining minimum inventory levels to avoid a glut of steel products, should prices decline rapidly, according to analysts.
The resulting shortage is making it difficult to obtain sheet steel for service centers and small-tonnage users who are on allocation, according to the survey. However, analysts project sheet inventory, while low, is sufficient for short-term demand.
Despite waning demand for sheet steel in the U.S., global demand remains strong, resulting in a tightening of demand worldwide and increasing offshore prices.
As a result, North American steel mills can expect competition from global producers who have started manufacturing in the U.S., either by buying companies or building new mills.
Several foreign producers are working to meet demand from U.S.-based metalworking companies in automotive, appliance and machinery industries for customized and advanced products.
Major steel manufacturers who have recently entered the U.S. market include ThyssenKrupp, of Germany; Severstal, of Russia; and Essar Steel, of India.
