Manufactures Report Service Centers Dropping Spot Steel Prices

As you can see by the graphic below manufacturing companies are reporting service center prices as dropping by ever larger percentages since we saw the early crack in pricing the first week of January 2014.

It is SMU’s opinion that distributor spot pricing is a harbinger for the direction spot mill pricing will go over the near term. However, we have found in the past that once the service centers reach a point of capitulation (which we have defined as 70+ percent of the distributors lowering pricing) the domestic mills at that point have the ability to raise prices.

Service centers have not yet reached capitulation as 33 percent of distributors reported prices as falling while a small group (5 percent) reported prices as rising (plate?). The percentage reporting prices as dropping has increased from 21 percent in February and zero percent back at the beginning of January.

Below is a longer term view of service center spot pricing. We have to go back further in history to find points when service centers reached the capitulation level.

We capture a large amount of information through our twice monthly market analysis and we share a good portion of both the current and historical data with our Premium Level members. For information on how to become a Premium Level member go to the subscribe section of our website or contact our office: info@SteelMarketUpdate.com or 800-432-3475