Last week, American Metal Market published an important article regarding stainless prices in the month of February. We’d like to inform our trusted customers and blog readers of specific raw material price increases:

News Summary
The article states that large mills and distributors are increasing stainless steel prices in advance of stainless surcharges, which begin in March.  Since manufacturers have been aware of these upcoming surcharges, many “stocked up” in January.  Distributors fear they might run out of stainless inventories completely if they do not increase prices to allow for this surcharge.

Surcharge Expectations
Sources say the March surcharge on Type 304 stainless could increase by between 10 and 15 cents (up from 73 cents per pound in February), while Type 316 stainless could go up to $1.25 per pound from $1.06.  Additionally, distributors have increased flat-rolled stainless stock prices by around 5 cents in past weeks (since January 28).  When surcharges increase, distributors raise prices to cover their own bottom line.

Effect on Roller Die, competitors
Many manufacturers who purchase stainless are doing so conservatively, and not in a way that would deplete supplies by March (as the article first suggests).  The article states that large purchases have been mainly put on hold as prices rise, and manufacturers are buying in smaller quantities.  States a southern service center manager: “Real demand is still a little wishy-washy.”

Bottom Line
What is not “wishy-washy” is Roller Die’s commitment to providing top-quality stainless and flat-rolled steel products at the lowest possible prices.  Our huge inventory of free tooling enables us to succeed in times of rising steel costs, offsetting raw materials costs with lean manufacturing principles.  Remain confident that we will continue producing steel end products regardless of surcharge fluctuations.  We continue to watch this surcharge issue closely through March.

Here at Roller Die, our awareness of steel market activity is crucial. Many of our blog entries are dedicated to the topic. Our knowledge dictates our timing — the goal is to purchase when prices are lowest, to pass savings on to our customers. Plan your projects soon; steel prices are changing. Please see the letter below from our vendor, Kenwal Steel, regarding an anticipated price increase:

“…All of the other mills advise that there are more increases coming. I hope that everyone has their needs covered. If not, and you are contemplating on when to make your next purchase (or are possibly waiting to see if the increases hold) please consider the following:

• January 11, AK Steel announced a $60/ton increase for all new orders for all products. That increase is real and not going away.
• There are no March Cold Rolled tons available out there right now. All Cold Rolled orders are being acknowledged for April.
• There are very limited and possibly no February hot rolled tons available. We are likely looking at March for Hot Rolled as of today.
• Mills are currently paying $395/G-ton for busheling. (Don’t sell your scrap until next month!)
• Demand is currently stronger than anticipated. End user forecasts in many market segments show higher than anticipated demand in the next 90 days.
• In the eyes of the steel mills: The current “higher than anticipated” levels of demand has filled their order books for March faster than they anticipated, combined with increases in raw material costs (i.e. scrap) validates the current and forthcoming price increases.

Regardless of which service center you purchase your steel from, it would be my suggestion that everyone start thinking about securing their April needs now (for month-to-month or spot buyers) before this thing jumps up again.”

Roller Die is working to ensure our steel inventory stays consistent and that prices remain low. We are confident in our strategy; please contact us today to start a successful project.

COLD ROLLED

Most of the integrated mills are full for March on Cold Rolled. We were busy rushing our March orders to the likes of AK and Severstal yesterday. Mittal is currently on lead times but everything I hear tells me that they are full for March. USST is still a questions mark. Have heard that their larger mills(like US Gary) are already closed for march but a couple of their lesser sized regional mills still have a small amount of capacity for March(Mon Valley). Severcorr is another one with a big question mark as well….

In regards to the Mini mills, I have not heard a lot about SDI lead times or about them being aggressive in the Cold Rolled market lately, and Nucor I believe may still have some late March tons available, but those are likely to be dried up soon. Like next week, if not already full.

Hot Rolled

The Mini mills still have some late February availability. It appears that the Integrated mills are all pretty much into March for Hot rolled starting with orders entered next week. Mittal with a couple recent inquiries said late March and even April for some specific grades with recent inquiries….Hot Rolled is a little confusing simply due to the Integrated mills having the ability to stop producing slab orders to take push in HR coil orders.

Pricing

The mills are doing everything that they can to get prices up for March by $2.00/cwt….will be real interesting to see where we are with demand in 30 days…if the demand holds, then we can all be assured that some of these proposed increases will stick.

Bottom line is that you should be looking at your March hot rolled and April Cold Rolled needs now, and don’t be surprised if we hear price increase announcements soon for March orders.

Last week, I read a report from Goldman Sachs that said that we have seen the bottom in the steel prices for carbon based products for the year.    This was report was shortly followed by e-mails from the mills to notify us that they will begin raising prices starting January 1 2010.

This past friday, Nucor sent an e-mail to us saying that we they are going to raise their prices.  I know a lot of people who keep saying that the prices won’t hold, and they are waiting for a decrease.  I would not wait to lock in prices, for we are already seeing improvement in the economic.  The first positive sign is that the auto industry said that they will increase volume to 12.0 million from a low of 8 million.

The dollar is still decreasing against all the other currencies, so there will be less imports of steel.  The last reason that I just herd today was that China has decided that they would invest a lot of the dollars that they are holding into hard assets; such as oil, steel, cooper, and other commodities.

I am getting concerned with the availability of steel even for the most basic products.  We have seen our lead time increase this past week.  In addition to this pricing has gone up over 20 percent as well.  If you want to protect yourself I would suggest that you contact us about setting yourself up on a contract.  The contract will insure that the product you want will be there.  It does not protect against steel price increases.  These contracts usually last for about three months.

Under normal conditions we are able to secure tonnage and pricing for the entire term.

Steel prices, and the rest of the commodities will rise next year for the following reasons.   The United States has started printing money to help battle the economic crisis, and this is not a political statement just an economic fact.  When this has been done in the past it has caused a rise in the inflation rates.  The second effect of this economic crisis is that the dollar continues to decline against other currencies and this will also cause the prices for all the hard assets to increases.

With the weaker dollar it will be harder for many of the service centers, and mills to bring in imported steel.

Steel Prices are heading up, and I believe that they will move pretty fast over the next couple of months, and will be back above last years pricing.  There are several reasons for this.  The first one is that the Steel Service Centers are carrying inventory at historic lows.  So any increase in demand over the next couple of months will drive prices up.  The Second reason, is that the Mills have been forced to idle a lot of capacity, so they will be slow to react to the demand which will cause pricing to rise as well.

In the next couple of days I will also give reason why this will be a long term trend.