Steel Products Prices North America

Service Centers Expect New Price Increase Announcements in November

November 1, 2016

Steel Market Update has been discussing the subject of steel prices with service centers from around the country and there seems to be an almost unanimous belief that new price increase announcements will be made between now and Thanksgiving (November 24th). Here is a sample of what the service centers have told SMU over the past 24 hours:

A large coated steel service center told us, “Mills are holding more firm than anticipated. There is a global movement taking place right now due to input costs rising and the domestics appear to be on board. This may be an opportunity to close-out 2016 on yet another positive note for the USA steel industry.” This distributor went on to say, “We anticipate another mill increase announcement in November.”

A plate and hot rolled buyer told us that SSAB representatives were talking about a new price increase coming out of them as early as today or tomorrow (Tuesday/Wednesday).

A large service center group told us, “It seems that mills using lower priced offers in solicitations ended with the USS increase. This is a usual pattern where the lowest offers come off the board, when the market nears a bottom. I think the most usual spot price today about 480 – but I think there is little volume being placed (so far) at this level.” Regarding increases they told us, “Yes, another round of announced increases will be coming. [Price announcements] Should be before Thanksgiving, if not sooner.”

Another large service center group told us that their company was seeing “significantly higher” quoting activity over the last couple of weeks. They went on to say, “We are debating if the next increase will come out prior to the November scrap settlement or if the mills will use that increase to justify another $30 increase.”

Another distributor told us they had placed all of their orders. They told us, “…right now mills have chosen to cut a few large deals rather than follow market down with a bunch of small orders…[we] think mills just want to close 4th quarter and take a breather then start year [New Year] trying to hold up price. Notice no base price announcements or min sell [but] just [an] increase and from what to what?” In other words the $30 price increase does not provide a minimum sell base price so the numbers end up being all over the place.

From Texas we heard from a service center regarding possible next round of increases, “If their order books stay strong they will try another round soon. When lead times get fully into January would be a good time to try. Although, HR still seems weak enough to temper enthusiasm.”

A large service center headquartered in the Southeast told SMU they believe an increase is coming, “…as early as this week….”

From the Midwest we heard, “The mills seem to be digging in their heels and while I don’t think they are seeing much good news in HR booking – I hear that CR and Coated orders are flowing nicely. As a matter of fact – SDI Butler has closed their CR based Galv book (and apparently only have a little HR Galv space before they close it). Since it seems that no one in our industry likes a flat market – I do expect another announcement. Problem is – I think they are a few weeks early…”

A galvanized wholesaler was not so sure that a second increase was coming any time soon, “I think the November scrap increase was part of the decision for the 1st increase. The mills expected it. I don’t expect a 2nd mill announcement immediately in response.”