SMU Price Ranges & Indices: Small Adjustments

Another distributor of sheet and plate products reported that their company had seen the best quarter since 2008. They reported strong demand in the energy, general manufacturing, construction and fabrication market segments across the country. The South was where business was reported to be a tad slower and a little more competitive than elsewhere in the country.

A third service center in the Northeast told us, “…In each of the last three months including this one we have broken our highest shipping levels since 1989… In July we shipped more tons than in any prior month going back to 1989. In August we surpassed July and now in September we will have surpassed August.” This service center went on to point out, “The hard part has been the steady but higher prices out of the domestics versus the cheap imports. As a traditional supporter of the domestics it has become very difficult to sell their products and actually make any money.”

We are hearing from some of our sources that mill lead times have “stalled” and in some cases lead times have begun to creep back in as mills get caught up with the order books.

Steel Market Update has heard that ArcelorMittal and AK Steel are caught up on production after suffering through many months of production related issues coupled with strong demand – especially out of their automotive customers. Being caught up on production doesn’t necessarily put them into a discount mode. One buyer told us about the two mills, “Both still hard as hell to deal with.”

One of the reasons why the mills are being a little difficult to deal with is due to better mill discipline and also the hot rolled numbers are down to a level where the spread between foreign and domestic is not that wide right now. One large HRC buyer pegged the spot foreign number FOB Houston as being $610 per ton with domestic being at $640 or above. The $30 to $50 per ton spread does not make foreign attractive unless there is a huge freight advantage coming out of the ports.

Out of the Midwest we heard from a large service center, “It is important that we recognize both sides of the steel market: short-term and long-term. On the short side the weak iron ore pricing, a projected scrap decrease, demand seasonality , and continuous headlines of huge import levels is having a psychological impact on the market. Though these factors cannot be neglected, it is the long-term strength of this market which is keeping things from falling apart. Two simple words describe it best: Mill Discipline. Things are different today, and we need not look any further than the vast changes in mill leadership which is driving this shift.”

Here is how we see prices this week:

Hot Rolled Coil: SMU Range is $640-$670 per ton ($32.00/cwt- $33.50/cwt) with an average of $655 per ton ($32.75/cwt) FOB mill, east of the Rockies. The lower end of our range remained the same compared to last week while the upper end decreased by $10 per ton. Our average is now $5 lower compared to one week ago. SMU price momentum for hot rolled steel is for prices to remain neutral over the next 30 days. We believe that the domestic number is very close to foreign offers and that pricing will not drop much further without a push by one of the steel mills or new lower priced foreign offers.

Hot Rolled Lead Times: 2-5 weeks.

Cold Rolled Coil: SMU Range is $740-$790 per ton ($37.00/cwt- $39.50/cwt) with an average of $765 per ton ($38.25/cwt) FOB mill, east of the Rockies. The lower end of our range decreased by $20 per ton compared to one week ago while the upper end decreased by $10 per ton. Our average is now $15 lower compared to last week. SMU price momentum on cold rolled steel is for prices to remain neutral over the next 30 days. On cold rolled we need to watch to see if the domestic mills will file a dumping suit against the Chinese steel mills. At the moment, most trading companies are shying away from offering Chinese cold rolled. If there is no filing and the traders open the doors once again this could pressure prices for lead times in early 2015.

Cold Rolled Lead Times: 5-9 weeks.

Galvanized Coil: SMU Base Price Range is $750-$800 per ton ($37.50/cwt- $40.00/cwt) with an average of $775 per ton ($38.75/cwt) FOB mill, east of the Rockies. Both the upper and lower ends of our range remained the same compared to last week. Our average is unchanged compared to one week ago. SMU anticipates galvanized base prices will remain neutral over the next 30 days. This is an area where we have to watch to see how consolidation plays out on this product. We are hearing that a couple of the integrated mills are caught up on their order book for coated products. Will they go out and attempt to get some orders at prices outside of the range we have suggested above – only time will tell. Coated steels have also been suggested as being a possible dumping suit target of the domestic steel mills.

Galvanized .060” G90 Benchmark: SMU Range is $819-$869 per ton with an average of $844 per ton FOB mill, east of the Rockies.

Galvanized Lead Times: 4-9 weeks.

Galvalume Coil: SMU Base Price Range is $760-$810 per ton ($38.00/cwt- $40.50/cwt) with an average of $785 per ton ($39.25/cwt) FOB mill, east of the Rockies. Both the upper and lower ends of our range remained the same compared to last week. Our average is unchanged compared to one week ago. Our expectation is for Galvalume prices to remain neutral over the next 30 days. Galvalume is probably the one item that is most impacted by foreign pricing and would probably react the quickest to possible dumping suits. However, we are heading into a seasonal slower period for the product and, without a dumping suit, we expect prices to tread water to maybe move a little lower depending on how close the end user is to a port.

Galvalume .0142” AZ50, Grade 80 Benchmark: SMU Range is $1051-$1101 per ton with an average of $1076 per ton FOB mill, east of the Rockies.

Galvalume Lead Times: 5-9 weeks.

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