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Analyst: New US sheet capacity yet to impact market - 3 August 2011

Longtime industry analyst Charles Bradford says additional US sheet capacity hasn't yet had much impact beyond "garden variety commodity grades," and he doesn't expect ThyssenKrupp's new domestic mill to be a major auto player for some time.

Bradford, in a research note seen by Steel Business Briefing, says most US sheet producers have "played down the impact of the 'new' mills on steel supply and pricing."

Still, many in the distribution sector point to additional capacity coming onstream at TK and elsewhere contributing to oversupply in the market, contributing to the continuing decline in spot sheet prices.

Buyers tell SBB hotrolled coil can be had for $680/short ton, fob, while coldrolled coil and hot-dipped galvanized material is going for about $780-810/s.t and $790-840/s.t, respectively. Bradford says his organization hears "HRC is currently available from a number of sources at $640."

However, he says the new capacity has yet to gain significant penetration in higher-end markets like automotive.

"For instance, we had been told several months ago by very senior BMW South Carolina-based officials that they didn't expect to be able to buy from the new ThyssenKrupp plant in Alabama until next year, due to the product qualification process," Bradford says. "We now hear that this could be delayed until the third quarter of 2012 due to internal logistical issues of TK in Alabama and this plant has been running, at least partially, for a year."

Spokesman for both TK and BMW did not immediately respond to SBB's requests for comment.

 

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