From the wholesaler standpoint the question asked a number of times during the conference call was at what point would prices bottom out. “There seems to be no bottom to the market right now,” is what one wholesaler shared with the group. “Our costs are never right,” continued the executive. He went on to tell the group that the special negotiated pricing they have at the domestic mills was good when negotiated but by the time they receive the steel, “…pricing deteriorates and margins suffer.”

A wholesaler in the Southeast told the group that the fundamentals of the steel market are different than what he had seen in past cycles. The combination of lower commodity and scrap prices was in conflict with an improving economy. Steel prices were responding to the commodity and inventory issues and not demand. “I have a bad feeling about the whole market,” he told the group. “I don’t like what I see and it could be a long first, second quarter 2015.”

In Canada things are reversed. One of the manufacturing companies who supplies HVAC materials to the wholesalers told the group that the rise of the value of the U.S. dollar has driven his steel costs in Canada up, as they buy steel based on U.S. dollars and not Canadian dollars. “…Canada is shaken by our dollar [Loonie], down to 84 cents this morning… It is affecting pricing of metal because it is based on U.S. dollars. Our pricing from domestic mills are going up drastically. All affected by the dollar. [It is] just the opposite [in the USA], you have a strong dollar and pricing is dropping." He then went on to tell the group that the residential construction business in Canada will be lower in 2015 than what they saw this past year.

The wholesalers expressed some concerns regarding business at this point in time. Competition from "non-traditional service center suppliers" continues to be an issue and the wholesalers complained of service centers taking their business at low prices which impacts the wholesalers’ margins. “We are selling more single digit steel than normal,” is what one wholesaler told the group regarding his company margins on galvanized steel sheet products.
One of the service centers on the call told the wholesalers that "risk management" will be key in the coming months. "We have seen numbers tick, ticking down...There is nothing, no hard evidence out there that is going to turn this market around. It is going to take a trade case, the Great Lakes freezing over affecting iron ore [to reverse price direction]. People need to proceed with caution. Be careful how much [steel inventory] that you put on the floor."

"This market puts a premium on strong vendor relationships, whether mill or service center," said a wholesaler executive. His comment was echoed by others on the call.