WSJ piece mentioning price of "hot-rolled steel" ..................................
Does anyone know if this article's "hot-rolled steel" is the same as "hot-rolled coil" mentioned in the April 6, 2006 WSJ article (that I am replying to) ?
Jon.
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SEPTEMBER 29, 2008
Steelmakers See Demand Fall Sharply, Prices Decline
By ROBERT GUY MATTHEWS
Steelmakers in the U.S. are experiencing a sharp pullback from buyers who are spooked by the credit crisis and a slowdown in automobile and construction markets, causing inventories to rise and prices on some key products to drop 10%.
Although weakening demand and prices are being partially offset by falling raw-material costs, particularly of scrap, some steelmakers already are cautioning that robust earnings from earlier in the year won't be sustained in the year's second half.
"The instability of financial markets and the general slowdown in the commercial building sector are cause for concern in coming quarters," said George Stoe, chief operating officer for Worthington Industries Inc., an Ohio-based steel processor.
Demand for rebar steel, often used to build roads, bridges and office buildings, has fallen dramatically in the U.S. because some projects are being delayed or put on hold amid the uncertainty in financial markets, steelmakers said.
Exports for rebar steel fell in July, after six straight months of increases, indicating that demand from foreign markets likely won't be a substitute for weak domestic growth.
The Precision Metalforming Association reported in its latest outlook that more incoming orders from steel fabricators, which shape and form steel for items such as appliances, are expected to drop over the next three months largely because of the uncertainty in the credit markets.
Steel service centers, which act as middlemen between steelmakers and steel end users, also are reporting that their inventories have been ticking steadily upward over the past few months. Steel users are limiting their steel purchases and only buying what they immediately need, fearing that they will be stuck with high-priced steel sitting in their factories.
Hot-rolled steel, a basic building block for most all steel products, is selling for about $1,000 a short ton, off about $110 from earlier this year. That is still relatively high, which should cushion steelmakers' profits.
Many steelmakers are using the slowdown to schedule maintenance outages in hopes that demand will pick up later in the year. ArcelorMittal, the world's biggest steelmaker by production, said that it aims to reduce output by about 15% in certain countries this year. Other steelmakers are likely to follow suit.
Some steelmakers said some markets that consume steel to make pipes and tractors, such as the energy and agriculture sectors, are expected to stay strong.
Write to Robert Guy Matthews at robertguy.matthews@wsj.com
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