US service centres tread fine margin line

US service centres are managing their businesses carefully to balance rapid mill increases and moderate demand, Kallanish learns from market sources.

“The smart ones have a balanced inventory,” says one Midwest service centre executive. “We either get our price or pass on the opportunity.”

There are still deals available from some mills, despite the prevailing hot-rolled price of $630-650/short ton, he adds.

“There is a lot of pushback and in many cases they find someone desperate enough to sell to them well below the going market price,” he says.

A second Midwest service centre executive says distributors are trying to keep pace with mill increases, but available inventory deals undercut that opportunity.

“Prices have moved up very fast at the mill level,” he says. “There are many more businesses who sell from inventory. This remains intensely competitive, but prices at distributors are moving up and chasing replacement costs. But it takes longer for all the prices to work through the supply chain.”