Are U.S. Steel Mill Lead Times Real?
I am confused and could use some guidance from those of you in the steel business who stumble across my website over the weekend - or early next week. Lead times have been extending at a number of mills. U.S. Steel and Nucor in particular have essentially told their customers they are not accepting new orders for the month of August.
In the U.S. Steel situation I am being told by USS customers the mill has a melt backlog of approximately 73,000 tons and that is one of the reasons why Granite City is bringing back a blast furnace. Our belief here at SMU is U.S. Steel and the other automotive related steel mills have received a surge in orders from the auto supply chain which had depleted their inventories in anticipation of the Chrysler and GM bankruptcy filings. They are also a supplier to the Agriculture related business (grain bins, etc.) which has come back to life over the past few weeks.
I am confused about some of the other mills lead times as there appears to be a big difference from mill to mill. Severstal, Columbus which is located in Columbus, Mississippi reported their lead times late this week as being in the first week of August (week of 8/3) on all products with the exception of galvanized culvert (week of 8/10).
Looking at other Severstal facilities across the country their lead times are running as early as 7/20 on Hot Roll out of Sparrows Point with all other products being mid-August with the exception of the NGL coating line (Galvalume) which is known to be sold out of the month of August (inquire lead times). Dearborn lead times are mid to late August on all products.
The conversion mills - CSN, The Techs, Wheeling Nisshin and Sharon Coatings all have August tonnage left. I did hear WN has perhaps the strongest book of the conversion mills but, I anticipate this is because of their ability to coat Galvalume while the others are strictly galvanizing mills.
So, I am perplexed as to why Nucor's lead times on all products would be out of the month of August. Did the mill over book July orders (at July prices)? Are their salesman "pushing" the lead times in order to book extra business? Are some of the domestic mills trying to set their customers up for potential September price increases?
Earlier this week Dan DiMicco told attendees of the Steel Survival Strategies conference he expects their order book to average 60% for the second half of the year. Earlier this month, John Feriola, COO of Nucor told the MSCI Florida chapter they see no catalyst in demand and that they have plenty of scrap to react to a surge in demand. At the same time their sales people are advising their customers they are almost sold out (or are sold out) for the month of August....
What is reality? I would like to hear what you and your company are seeing regarding lead times and real market demand for steel?
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