Bits ‘N Pieces: A Galvanized & SMU History Lesson

In 1999 I was representing Winner Steel, a galvanized conversion steel mill located in Sharon, Pennsylvania and now part of the NLMK USA group. I quoted a large service center group in the Southeastern USA the following contract prices (all FOB Sharon, PA):

.010” X 36” X Coil G30 @ $30.50/cwt.
.015” X 48” X Coil G30 @ $26.50/cwt.
.017” X 48” X Coil G40 @ $25.50/cwt.
.026” X 35” X Coil G40 @ $23.00/cwt.
.034” X 34” X Coil G40 @ $20.00/cwt.

In my notes I had competitive pricing analysis done for another domestic steel mill (dated January 6, 1999) and the galvanized base price being used at that time was $19.50/cwt (plus the mills were equalizing freight).

The same customer was quoted some HVAC items in May 2001 (Delivered to Tampa, FL by rail), all 10,000# max coils:

.0187” X 48” X Coil G60 @ $22.20/cwt.
.0187” X 48” X Coil G90 @ $24.05/cwt.
.0236” X 48” X Coil G60 @ $20.20/cwt.
.0236” X 48” X Coil G90 @ $21.70/cwt.

I also found notes for a contract quote on both CS/B and DDS/IF material which was dated August 23, 2001 and the base price being used was $16.25/cwt!

By the time we reached January 2003 things were beginning to change. Here are some of the prices I quoted an HVAC wholesaler for March delivery (about 8 week lead times). Prices referenced include freight to the East Coast from Sharon, PA and the coils are 10,000# max:

.019” X 60” X Coil G90 @ $29.75/cwt.
.023” X 60” X Coil G90 @ $27.35/cwt.
.029” X 48” X Coil G60 @ $23.95/cwt.

Then I came across prices for another wholesaler dated June 2005. Prices shown include $1.90/cwt in freight charges and the base price being used was $30.00/cwt:

.0190” X 48” X Coil G90 @ $40.10/cwt.
.0236” X 48” X Coil G90 @ $37.75/cwt.
.0296” X 48” X Coil G90 @ $36.00/cwt.

I also found prices for the same items to the same customer, only dated March 30, 2005, and the base price was $32.00/cwt not $30.00/cwt as listed above.

I had a number of furnace pipe manufacturers who purchased steel from me on a regular basis. Prices were starting to get a little “testy” by late 2003. I came across a quote which called for firm prices for August through September 2003 but any steel falling into October would be increased by $10 per ton.

Prices shown below are for G30 galvanized with freight prepaid (about $1.50/cwt), 10,000# max coils and all decimals are nom (+/- tolerances) rolled to the light side and billed on actual weight:

.015” X 48” X Coil G30 @ $26.80/cwt.
.018” X 48” X Coil G30 @ $25.55/cwt.

The same items quoted for March 2004 delivery only and quoted in January 2004, four months after the quote above:

.015” X 48” X Coil G30 @ $31.30/cwt.
.018” X 48” X Coil G30 @ $30.05/cwt.

In four months the prices on each item had increased by $4.50/cwt and the mill was only quoting prices one month at a time.

Late in January (23rd) 2004 we quoted prices on the same items only now they were for April shipment only:

.015” X 48” X Coil G30 @ $35.30/cwt.
.018” X 48” X Coil G30 @ $34.30/cwt.

It was during this time that Steel Market Update was born as a way of helping my customers understand why prices jumped $90 per ton over a few months time and then jumped $80 to $85 per ton in less than 30 days!

It was at this point in time that I decided that my customers needed to better understand the circumstances behind the jump in pricing and what they needed to do to protect themselves. This was the time when I started writing Steel Market Update for my buying customers. Over time it was picked up by other sales people to assist in their sales process. I have produced the Steel Market Update on almost a daily basis ever since.

SMU Note: At what point in time did the domestic mills raise prices to never before seen levels (and not seen since)? I happened across my pricing file for 2008. The first price increase letter I came across was from ArcelorMittal dated March 10, 2008. Base prices were referenced as being: hot rolled = $40.00/cwt ($800 per ton), cold rolled = $45.00/cwt ($900 per ton) and galvanized = $46.00/cwt ($920 per ton).

By the end of May prices had jumped (based on USS letter dated May 28, 2008) to: HRC = $54.00/cwt ($1080 per ton), CRC = $59.00/cwt ($1180 per ton) and galvanized = $59.00/cwt ($1180 per ton).

USS sent a quote letter on July 12, 2008 to a service center customer taking their base prices to: HRC = $56.00/cwt ($1120 per ton), CRC = $61.00/cwt ($1220 per ton).

SMU hot rolled spot price average peaked in July 2008 at $1070 per ton ($53.50/cwt) just prior to the market crashing. Steel Market Update incorporated and began selling subscriptions for the very first time in August 2008.