Steel Mills

Steel Buyers Weigh in on USS Price Increase

July 9, 2015

Earlier this week US Steel came out with a $40 per ton price increase. Since then the other mills have been eerily quiet not yet jumping on the bandwagon. It is normal for the smaller mills to wait and see if the larger mills will follow the lead. So far this week, they have not.

There has been speculation since the USS announcement that the timing of the price increase was due to the expected cold rolled trade suit rumored to being filed by the domestic steel mills yet this month. Here is an example of the dialogue that is occurring within the industry as a large service center shared their thoughts with SMU this afternoon, “The market is quiet. [I] Have not heard of any other mills talking about additional price increases. With iron ore and oil taking a hit, and with lead times depressed on HR and CR, USS is going to have a difficult time collecting any part of this latest increase…unless they know something that we don’t know (ie. additional Trade Case filings). If that’s the case, it is wise of them to make the announcements now instead of the day after the filings as that would look like they are taking advantage of the situation.”

SMU spoke with one of the commercial managers for a domestic steel mill who told us that they had not seen any other mill officially move prices higher. At the same time they confided in us, “…We have quietly eked out additional increases on coated and had some fence sitters send in hot rolled and cold rolled orders at quoted prices (which included prior increases).” He went on to say about possible new trade cases, “As far as trade cases I am as tired as everyone else on the subject.”

The General Manager of a large service center shared detailed thoughts about the US Steel price increase and where the market stands at this point in time, “It seems to me that the market has absorbed only the first increase of $20-25/ton above the recent average monthly lows, for all 3 products. The general question in my mind is not whether a specific increase can take hold or not (the 2nd one clearly has not), rather are the dynamics on the ground pointing toward higher prices. The market is very split north vs. south at the moment. Northern mills are enjoying longer lead-times fueled by strong Auto which includes make-ahead tons (admitted by mills), while southern mills have normal to short lead-times. Between the 2 regions, we have a fairly “balanced” market.”

Another service center executive told us that their business has slowed over the past few weeks and their need to buy inventory has been greatly reduced. If other service centers are in the same position this executive told us, “It’s not an environment conducive to getting orders up.”

It would also be a difficult market to push prices up – at least not in quick $40 per ton chunks….