Steel Products Prices North America

Price Increases Take Base Prices to What Levels?

March 6, 2016

The market is weighing the latest attempt by the domestic steel mills to raise flat rolled steel prices. Virtually every mill has come out with spot market price increase announcements of $30 per ton on hot rolled, cold rolled, galvanized and Galvalume steels. However, there are a couple of mills that have very little spot business. These mills (US Steel, AK Steel) may have base prices higher than what is actually transacting in the marketplace.

A good example is AK Steel which announced specific base prices on December 9th which was their first increase in the current “up” cycle of pricing. They announced hot rolled base pricing at $420 per ton ($21.00/cwt), cold rolled base pricing at $540 per ton ($27.00/cwt) and galvanized base pricing at $550 per ton ($27.50/cwt). Since then they have made two announcements of $30 per ton each ($60 per ton total). So, if they were collecting all of their announced increases hot rolled should now be $480 per ton ($24.00/cwt), cold rolled $600 per ton ($30.00/cwt) and galvanized $610 per ton ($30.50/cwt).

Spot market pricing on cold rolled and coated have risen close to the levels suggested by AK Steel in their series of announcements. However, hot rolled has not been able to keep pace as can be seen by the various indices available. The SMU hot rolled index average for this past week is $410 per ton, still below the initial price level suggested by AK Steel back in December.

Right now, with no mill providing specific base price guidance, steel buyers are struggling to figure out what the bottom of the range is going to be. On hot rolled we have heard numbers as low as $21.00/cwt ($19.50 + $1.50 = $21.00/cwt) or $420 per ton. Our best guess is most customers have been paying $400-$420 per ton which would put HRC at $430-$450 per ton ($21.50/cwt-$22.50/cwt) but we have heard numbers some buyers expecting HRC prices to be as high as $460 per ton (thus the confusion in the market).

Cold rolled and coated prices are perhaps a little easier to figure out as the lower end has been approximately $28.00/cwt to as high as $29.50/cwt (plus extras). This would put base prices in the $29.50/cwt to $31.00/cwt range (much closer to what AK Steel suggested based on their announcements over the past few months).

We did speak to one conversion mill late last week who told us that their mill would be asking $29.50/cwt base pricing on galvanized spot orders.

We expect that the market will provide more guidance early this week as SDI opens their order book for Butler and more customers begin asking for specific quotes on business they need to place. We will see if the latest round of increases has any immediate impact on the indexes when we release our pricing on Tuesday evening.