Canadian Steel Buyers Waiting Until T-Shirt Weather for Spot Tons

It might be T-shirt weather before steel buyers in Canada have access to spot tons of sheet and plate, according to market participants.

The three main Canadian sheet suppliers–Algoma, Stelco and ArcelorMittal Dofasco–are largely sold out through May and are in some cases out as far as June.

 And when it comes to plate, Canada’s only domestic supplier, Algoma, is booking July, sources said.

On the sheet side, Algoma has closed May and is taking orders for June, they said.

An Algoma spokeswoman did not confirm those specifics, but in general chalked the extended lead times up to strong demand.

“Our customers value our product. Longer lead times are largely a function of the strong demand we are seeing from our diverse customer base and ongoing contractual commitments in sectors such as auto,” she said.

The situation at Stelco is similar. The steelmaker was in the process, when this article was filed, of booking the few remaining tons it had for May, sources said.

A Stelco spokesman declined to comment, citing the company’s upcoming fourth-quarter earnings release. “Any comments we have regarding our operations or other commercial matters will be made during our earnings update,” he said.

ArcelorMittal Dofasco also has only limited tons available for May, sources said.

The company did not respond to a request for comment or confirmation for this article.

“I would say Canadian mills are, for the most part, sold out through H1 with some relatively small tons remaining open for spot in June and a very small amount remaining for May,” one Great Lakes service center source said.

And what spot tons are available have been earmarked mostly for larger buyers, with mills in some cases “blanking” smaller customers they would ordinarily have steel for, he said.

Mills in addition continue to run “very far behind” on deliveries, even if they have done a better job of catching up to demand more recently, the Great Lakes source said.

The situation in Canada–one of long lead times and limited spot availability–mirrors that in the northern U.S., where high prices and long lead times have caused some buyers to move to the sidelines on fears that prices could correct sharply downward by the time material ordered now is delivered.

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And Canadian mills, like those in the U.S., have been hit by a variety of unplanned issues. Stelco, for example, was the target of a cyberattack last year. And ArcelorMittal Dofasco suffered a breakout that required it to take an unplanned outage in the fourth quarter.

Steel prices in Europe and Asia are already falling as are prices for raw materials such as ferrous scrap and iron ore, a second Great Lakes source said. And North American prices are unlikely to remain decoupled from global price trends indefinitely. Imports are also becoming a bigger factor in the supply side of the equation, he added.

“People can now buy import and pay duties and be significantly cheaper than North American pricing,” the second Great Lakes source said. “The only consumers paying these (domestic) prices are those short on stock.… As a business, we’ve already reconciled that if we’re out of stock, we’re out of stock–pass on the order and move on. We aren’t going to chase our tail trying to serve everyone. The risk is too high.”

Steel Market Update does not publish Canadian steel prices. But steel prices in Canada tend to trend with those in the United States once adjusted for currency differences.

SMU’s average hot-rolled coil price is at $1,150 per ton ($57.50/cwt), an all-time high. But the pace of increases has slowed over the last two weeks.

By Michael Cowden, Michael@SteelMarketUpdate.com