SMU Data and Models

Less Than 50% of 2014 Contract Negotiations Concluded

November 10, 2013

Based on the SMU steel market survey which was concluded this past week, less than 50 percent of 2014 flat rolled steel contracts have been settled. When asked if negotiations with the domestic steel mills had resulted in at least having contract pricing in place for the 1st Quarter 2014, 34 percent of manufacturing companies and 41 percent of service centers responded their deals are done. With lead times approaching January on coated products and into December on hot rolled, the pressure to come to a resolution is building.

We asked of those companies who have not yet settled their contracts how many would take their business to the spot market for 1st Quarter 2014. We found 62 percent of the manufacturing companies and 63 percent of the distributors plan on going to the spot markets if they are not able to come to a resolution of pricing for at least 1st Quarter 2014.

Companies appear resigned to the idea of paying more for their contracts tons as we move into 2014. When asked if they believe they will be paying more, less or the same as they are paying now in 4th Quarter, 62 percent of the manufacturers reported more and 69 percent of the service centers agreed they will be paying more for their 2014 contract tons. Those responding the same were 25 percent for the service centers and 32 percent for the manufacturing companies. Those responding less totaled 6 percent for both the distributors and the end users.