More on price hikes. HR holding. CR questionable.
Subject:
Steelmakers see partial success with price hike
Date:
Mon, 2 Mar 1998 15:56:50 -0800 (PST)
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News Alert from Reuters via Quote.com
Topic: (NYSE:AKS) Ak Steel Holding Corp, (NYSE:X) Usx-U S Stl Group, (NYSE:BS)
Bethlehem Steel, (NYSE:NUE) Nucor Corp,
Quote.com News Item #5606522
Headline: Steelmakers see partial success with price hike
======================================================================
PITTSBURGH, March 2 (Reuters) - Domestic steelmakers are
achieving some success with a price hike announced early this
year, but a threats from imports and new capacity are keeping
prices down on one major product line, industry sources and
analysts said.
Sources said producers are booking higher prices for
hot-rolled and galvanized sheet steel but tags for cold-rolled
sheet, typically a high margin product, are lagging behind.
"The price hike on hot-rolled and galvanized seems to have
stuck," said a purchasing manager at a Southeast steel
distributor. "But it's not holding on cold-rolled."
Steelmakers announced in January they would boost tags on
hot-rolled steel by $10 per ton, on galvanized steel by $20 per
ton, and on cold-rolled steel by $15 per ton.
AK Steel Corp (NYSE:AKS) initiated the price hike, and was
followed by all major producers, including U.S. Steel (NYSE:X) and
Bethlehem Steel Corp (NYSE:BS).
Despite continuing strong demand for all three products,
the cold-rolled increase is precarious because of various
market pressures, sources said.
Chuck Bradford, an independent industry analyst, noted that
eight million tons of new cold-rolled domestic capacity are
scheduled to come on line over the next two years, making
buyers fearful of oversupply and therefore reluctant to accept
a price hike.
Steelmakers have been increasing production of cold-rolled
steel because of its typically higher price margins, but
Bradford said that strategy is backfiring because the new
supply threatens to bloat the market.
"The steel companies are all trying to do the same thing,
and they either don't pay attention to what the other guy is
doing or they don't care," he said.
Moreover, sources said the continuing financial crisis in
Asia could send a heavy amount of lower-priced imports to the
domestic market, also stopping buyers from accepting a price
hike from U.S. producers.
"A lot of (buyers) are looking at Asia and hearing about a
lot of (lower-priced) cold-rolled offerings and trying to buy
them," said Aldo Mazzaferro at Deutsche Morgan Grenfell.
"Nothing has been delivered yet but I think in May or June we
could see a real physical impact."
Mazzaferro said imports could spell further trouble by
setting the stage for price cutting by domestic producers later
this year.
"I really expect pricing to come down a little," he said.
"Shipments from U.S. mills are very strong right now and
they're succeeding with the bulk of the price increase.
"But there's a storm cloud hovering over Asia and it's
moving its way over here."
However some industry officials said concerns about
oversupply are overblown.
"Everybody has overblown the supply situation," said John
Correnti, president of Nucor Corp (NYSE:NUE). "Demand is still
very, very good...and pricing is 80 percent demand driven, 20
percent supply driven."
Correnti said the price gap between domestic steel and
foreign steel is not as wide as many people might think,
because domestic steelmakers over the past several years have
slashed production costs and simultaneously improved quality.
"I'm optimistic on pricing this year," he said. "I'd bet
that prices will either stay the same or go a little higher. I
would not bet that prices will stay the same or go down."
Copyright 1998, Reuters News Service |
