Will Steel’s Price Hike Stick?

• “One mill admitted they are just trying to stop the downward slide.”

• “All the mills can hope for is to stem the slide and that no one breaks ranks.”

• “I think the mills will stop the price erosion and collect some of the announced increase, but not the full $30.”

• “[The hikes are] putting a floor on pricing and stopping the recent decline. [The market is] awaiting the findings of the Section 232 and actions the administration may take.”

• “[The hike] should stop the bleeding. Hopefully it stops the freefall.

• “There are mixed offerings in the market. I think at this time it will help put a floor on the market, but the increase will be fully realized in 30 days.”

• “It’s a stop the bleeding maneuver. Virtually real-time transparency of all elements affecting production and distribution of steel makes it difficult to move the price needle unless there is a real event in the market.”

• “We are coming into the summer months. Demand has been slow. In May, we were off 15 percent. Speaking with both domestic secondary suppliers and foreign traders, they had a slower May than anticipated. I believe domestic mills will try, but I just cannot see an increase sticking at this time.”

• “Cost of inputs simply does not support such an increase. The mills are using Section 232 as a tactic to move buyers from the sidelines.”

• “Lead times are falling and many mills are interested in taking orders for immediate delivery. Thus prices are subject to negotiation, especially if tonnage is involved.

• “This may be an opportunity for mills that do not have extended lead-times to steal a few tons from those that are increasing the price to stop the erosion.”

• “What fundamentals back up an increase right now? Lead times are relativity short. Scrap is poised to go down in June, not up. The mills have no spot cold rolled business right now, which is why the CRU price for cold rolled went up last week. In our opinion, we are going to chase down the market until [Commerce Secretary] Ross makes his 232 determination. After that we will see where the market goes.”

• “Until we get clarity on 232 and strengthening demand, it will be difficult [to collect higher prices].”

• “I think they will settle for a portion. I just don’t see the market strong enough to get all of it. Automotive is declining and oilfield is coming back a little, but just not enough for a strong market.”

• “It really depends on what scrap prices do. If scrap increases, then the mills will be able to collect an increase. If scrap remains flat or falls, then there really is no reason for steel prices to increase. Lead times are becoming shorter and buyers continue to hold off on placing orders.”

• “Buyers seem to be in control. They seem to be holding back on purchases, trying to push the market down.”

• “Foreign steel is still coming in. Until we see something concrete from the U.S. government, domestic pricing will still have issues getting increases.”

Though it’s the minority view, some steel buyers do expect the mills to collect at least part of the increase:

• “The increase may be short-lived, but it may at least stop the slide in pricing, which I’m sure everyone would welcome.”

• “After they announce a second increase in about 10-14 days, they will collect all of the first one.”

• “Once through the July order book, demand should be sufficient to get the price increases through due to low service center inventories and reduced import volumes.”

• “Imports are more restricted due to uncertainty caused by the Section 232 investigation, as well as threats of further trade actions by the mills and the current administration. Buys will shift to domestic mills and order books will jump.

• [The price hike] is to try and stop the recent downward trend in pricing as mills wait for some potential positive reinforcement from Section 232. If findings are not in favor of the domestic producers, this market will go into a tailspin.”