Steel Products

Does This Price Increase Stand a Better Chance than the Last One?

March 8, 2013

SMU asked those taking this week’s steel survey if the latest price announcement stood a better chance of having at least some of the increase being collected than the one announced six weeks prior. We presented the percentages in our last issue of Steel Market Update (SMU 3/6) and now we would like to provide a few more of the almost 60 comments we received on this one topic alone:

“Demand just isn’t there yet, if mills don’t get orders they will start cutting deals again, then everything starts over. Service centers are not helping the market either when they continue to offer pricing lower than the mills.” – Manufacturing Company (building products)

“Not enough demand to support the price increase. Perhaps it will fly in the August time frame.” – Manufacturing Company (agricultural products)

“Lead times are too short. Deals will be made” – HVAC Wholesaler

“The mills announce increases at every little “tic” in the market. When they do, buyers back off, mill orders decline, mill caves on the price increase and the cycle starts again. Plus no one believes what any “reasons” the mills give for needing the increase.” – Manufacturing Company (storage racks)

“Scrap will help.” – Service Center

“Only slightly, due to longer lead times and higher import prices” – Trading Company

“I don’t expect positive comments towards the latest announcements until April and beyond. There is still weak demand in construction due to weather, cheap imports and lower cost domestic supply that has to be absorbed. Service Centers are still quoting 4th quarter 2012 prices.” – Trading Company

“Supply side fundamentals remain unchanged. Another new mill by Correnti… why? Among investment selections, why would an astute investor select an industry with enormous capital startup costs in which everyone, including newer entrants are struggling? This industry appears so fundamentally archaic at times. Meanwhile, with ore prices coming down, the offshore mills will enjoy a respite from peak input costs, and surely resume undercutting domestics by a wider margin.” – Trading Company

“From where I sit, the only thing happening is scrap may go up short term. Import prices have gone up due to increases in Iron Ore, but how much impact will that really have?” Manufacturing Company (doors)

“Scrap climbing, too many buyers held their breath at once…” Service Center

“The yes is conditional on the seasonal uptick in demand…should it fail to materialize, we may be here a while…” – Service Center

“Regardless of where scrap goes this month the demand is not there to substantiate an increase. The good thing is that it has stopped another slide but this will be short lived and prices should begin drifting lower in a couple of weeks.” – Service Center