Northern Steel Prices Appear Firm - South Has Some Flexibility

All of the current production issues are relegated to the northern fully integrated steel mills. One of our service center contacts laid out the production scenario and how it is impacting the other northern steel producers:

“The Great Lakes outage, and then accident during repair, and the Gary reduction in output is the important factor in the market. The reaction to this is replacing tons USS will not deliver on with other suppliers.  SDI, Gallatin, NUE, NLMK, and NSBS have all been beneficiaries of purchases to offset USS deliveries.  This had these mills enjoy robust business for May, and that is likely also materializing for June.  AM should be back in the spot market in the Chicago and Cleveland areas for June deliveries, and to start they will be asking for full list price – I’m surprised there hasn’t been higher prices signaled.  AK and Essar will likely not be in a position to be sources for June spot business. June deliveries should start with high prices, and we’ll see how imports and AM rejoining supply allow June to close.  Buyers likely replaced USS late items, but not cancel with USS due to the rising price market. That may mean that when USS comes back into the spot market with the normal tonnage available, it will be at a time of fatter inventories.”