Steel Products Prices North America

Service Center Spot Price Offers Beginning to Drop
Written by John Packard
September 8, 2015
Last week Steel Market Update conducted our early September flat rolled steel market analysis. One of the areas we watch very closely is how are distributors handling spot flat rolled steel purchase prices to their manufacturing customers? We have found that as service center spot prices weaken, so do mill prices until they reach the point of “capitulation” – the point where almost all spot prices are falling and there has been enough pain and trauma within the industry which provides a spark for the mills to raise prices.
We saw the service centers reach the point of capitulation (which we have defined as 75 percent or more of the distributors reporting their company as lowering spot flat rolled pricing.
First, we check the manufacturing segment of the industry to see what they are reporting when it comes to spot prices out of the service centers. This past week 35 percent of the manufacturing respondents reported distributors as lowering spot prices. This is an increase of 9 percentage points from mid-August and is 25 percentage points higher than what was reported just one month ago.
You can see the change in the trend in the graphic below.
We then asked service centers to report on whether their company was lowering, raising or keeping spot prices the same and we found very similar results as what was being reported by the manufacturers. As you can see by the graphic below, 35 percent of the responding distributors reported their company as lowering prices.
Our expectation is for this trend to continue unless something dramatic happens (such as an extended steel mill lockout) or other supply disruption.
The practice of dropping spot prices is a way for service centers to eliminate excess inventories. Until they remove excess inventories they do not have the need to buy more material from the domestic steel mills which keeps their lead times lean and their anxiety levels high making them more prone to negotiate steel pricing for future delivery.

John Packard
Read more from John PackardLatest in Steel Products Prices North America

CRU: US rebar and wire rod prices rise alongside S232 increase
CRU Senior Steel Analyst Alexandra Anderson discusses current market and pricing dynamics for long steel products in the US.

SMU Price Ranges: Sheet and plate steady ahead of Independence Day
Sheet and plate prices were little changed in the shortened week ahead of Independence Day, according to SMU’s latest check of the market.

Nucor maintains plate prices, opens August order book
Nucor aims to keep plate prices flat again with the opening of its August order book.

Nucor CSP remains level at $900/ton
Nucor maintained its weekly list price for hot-rolled (HR) coil this week, following two consecutive increases.

Cliffs raises prices, seeks $950/ton for July spot HR
Cleveland-Cliffs plans to increase prices for hot-rolled (HR) coil to $950 per short ton (st) with the opening of its July spot order book. The Cleveland-based steelmaker said the price hike was effective immediately in a letter to customers dated Monday.