Steel buyers who had been patient before the holidays were paying the price of inactivity as they forayed into the US steel market Wednesday, concluding deals at least $30/st higher for hot-rolled coil and $20/st more for cold-rolled coil. The Platts assessment of HRC increased 6.2% to a midpoint of $600/st ex-works Indiana--even as several mills announced further price hikes for March orders, and still some late February bookings.

The price of CRC also increased, by 3.1% to a midpoint of $670/st ex-works Indiana.

"It's a train wreck, it's absolutely crazy," says a mid-sized buyer in the Great Plains "For March, some mills are looking for $32 per hundred weight ($640/st), just two-three months ago, you could do a deal at $26 per CWT ($520/st)."

He was referring to ArcelorMittal USA, which told customers late Tuesday that it would raise March prices another $50/st on hot-rolled coil, cold-rolled coil and galvanized. Early Wednesday, Ohio-based AK Steel issued a statement saying it would increase spot market prices on its carbon steel products by $50/st for all new orders accepted for shipment on February 1 and later. "This increase is in addition to the $30/st hike announced on December 12, 2007," AK Steel emphasized.

"I understand their [mill] costs are going up," noted the Great Plains buyer, "but $20, then $30, now $50? It seems too much, too soon, too fast�but the mills are not backing off." AK Steel said in its statement that the price increase was in response to improving demand for carbon steel flat products, "as well as the need to recover higher costs for steelmaking inputs."

In ArcelorMittal's case, according to a Southern service center buyer, the company is now quoting HRC at $640/st ex-works Indiana for March delivery; and cold-rolled coil and galvanized at $730/st ex-works Indiana, also for its March book. Actual transactions, as assessed by Platts, continue to be below such levels.

Nucor also alerted customers Tuesday about an HRC increase of $20/st to $620/st ex-works South Carolina, and CRC to $700/st ex-works--but for new orders in February. "I'm told Nucor will open its March spot order book next week," said the Great Plains buyer, "and might even push for more than the others."

"Several mills still can accommodate February orders, which tells me business is not that great, since lead times are not stretching out," a Great Lakes buyer told Platts. He chuckled at the mention of steelflation as a period of rising prices in the face of weak demand, but added: "I've been in this business some 40 years and this is one of the only times I've seen prices rise so much while demand is down."

He described the market as chaotic, destined to "squeeze the hell out of the distributor." It's like a train, said the first buyer. "As fast as it's climbed the mountain, that's how fast it can come screaming down," he said.

A number of buyers also pointed to the problems of Severstal North America, the fourth largest integrated steelmaker in the US, which ceased production at the "B" blast furnace of its Dearborn, Michigan plant, after an accident Saturday. The unit suffered "substantial damage," according to a company spokesman.

"The side of the furnace blew out completely on Saturday," a steel-buying customer told Platts Wednesday. The smaller of two blast furnaces at Severstal NA, "B" furnace's daily output is about 1,950 st, or some 700,000 st/year. But as one service center source noted, "any little disruption in supply has a ripple effect."

Severstal NA's larger "C" blast furnace was not affected by the accident, but will be temporarily shut for a few days, the spokesman told Platts late Wednesday. "The two furnaces are side-by-side," he explained, "and we needed to protect the 'C' furnace."

Severstal ignited its "C" blast furnace in October after an extensive $324 million upgrade. The revamped furnace is projected to produce about 6,800 st/day of hot metal, or some 2.5 million st/year. Severstal NA is a wholly owned subsidiary of Russia's Severstal. The mill ships about 3.2 million st/year of flat-rolled steel.

On the heels of the Severstal setback, a few buyers noted that other steelmakers wasted no time in independently announcing their price increases.