6/15/2011 — The US sheet market faces difficult near-term demand and economic pressures heading into the American summer months, industry sources said yesterday.

In a report, Steel Reality chief analyst Josh Spoores said slow domestic economic growth “will continue to weigh on steel demand” going forward.

“GDP in the US was terrible in the first quarter. Current estimates for the year have GDP in the mid 2% range, as growth is expected to pick up from current levels,” Spoores said. “However, if economic data continues to come in at low levels, those 2.5% estimates of GDP will be revised downward.”

Still, flat-rolled imports this month through August are likely to be limited due to current domestic oversupply. as well as competitive prices and short lead times. “Fewer imports will create less drag on the current oversupply,” Spoores said.

He and others point to the auto sector as a bright spot. “May auto production increased by 9% over April’s levels,” Spoores said. “May production was 5% higher than last May, as (Japanese) earthquake-related slowdowns appear to be short lived.”

Jeremy Flack, president of Ohio-based sheet distributor Flack Steel, said the recent financial crisis has buyers worried about acquiring excess inventory, blunting demand. Unless mills curb production or more liquidity enters the market, pricing and demand will continue to erode, he said.

“There’s business out there,” Flack told Steel Business Briefing. “But, certainly nobody’s putting in anything more (in terms of orders) than they have to buy. People are so paranoid about their cash. That’s what’s driving the decisions buyers are making.”

(via SBB.com)

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