SMU Price Ranges Adjusted as Mills Become More Aggressive on HR and CR

A steel buyer this morning reported the $590 per ton number they received on Tuesday of this week was tied to a 500 ton minimum order amount.  Another service center, who is not a large buyer of hot rolled steel, reported they had a $590 number from their supplier prior to any negotiations.

Last night a large service center reported to SMU, “[Mill name removed] dropped HR spot to $28.50/cwt and CR to $40 – not tonnage based. Galv still inquire.”

This morning we spoke with a large service center who reported that they were still in negotiations but their expectation was the $28.50/cwt per ton level was where they thought they would land at the end of the day. They told us, “What I am hearing is that they are not negotiating or offering SPOT pricing unless it is tied to specific tonnage / items… Logical move since it prevents window shopping…”

The $28.50/cwt number is $570 per ton and sets a new low for domestic hot rolled spot offers.

We are therefore adjusting the lower end of our hot rolled range to reflect the new information gathered over the past 24 hours. Our hot rolled range will be $570-$630 per ton with an average of $600 per ton. The trend is toward the lower end of the range and we anticipate further price erosion until such time that the domestic mills are sold out through August lead times. We are being advised there are a number of mills with 2 week (or less) lead times for new hot rolled orders.

Cold rolled spot numbers are now closer to $800 per ton ($40.00/cwt) while galvanized numbers have had a little more “sticking” power and are running $40.00/cwt-$41.50/cwt with a number of mills still on an “inquire” only basis.

We are taking our cold rolled price range from $800-$840 per ton down to $800-$820 per ton which takes our average from $820 per ton down to $810 per ton.

At this moment we are leaving galvanized and Galvalume alone and maintaining the levels presented on Tuesday evening.

As we discussed in Tuesday evening’s newsletter, demand is the key to be watched from here.

Steel Market Update still feels the market is in a transitional phase and there continue to be a number of moving pieces that could impact the market and market prices in either direction. For that reason we are keeping our Price Momentum Indicator at Neutral but with a short-term negative tilt to it.