SMU Respondents Sound Off on Price Increase

We asked for comments as to why they responded the way they did and we received an earful:

“The mills are pushing increases until the customer forces them to stop when it causes the customer’s product to be priced out of the market.” Manufacturing company

“The lack of imports arriving in September and October will push many to go to the domestics to fill their requirements.” Trading company

“There is not enough real demand out there to justify an increase.”  Service center

“They are taking advantage of the market conditions, especially with the pending 232 case. There is no reason to raise prices; they are already making a very healthy margin with current prices.” Manufacturing company

“Most indicators are bearish, other than 232 anticipation. Until 232 is resolved, there isn’t real justification.” Service center

“Not based on raw material costs, etc.” Manufacturing company

“Demand has been just okay through late spring, as expected domestic mills will try to run up the price because of section 232. If pricing goes up too high, it will continue to weaken demand and slow growth.” Manufacturing company

“Really depends on the product; HRC/galv looks pretty solid, CRC not quite as strong.” Service center

“Mills’ costs are not going up, demand is flat or decreasing. Mills announced [increases] to try and stop further sliding of pricing.” Service center

“Too much inventory at hand for current orders.” Service center

“It seems to me that they are taking advantage of a situation they created (maybe on purpose). The economy is not what is driving this.” Manufacturing company

“We are usually slammed with business and enough of it to go around. It’s still a dog fight on the streets.” Service center

“Because they can get some of it/most of it. 232 fears behind their ability to collect higher prices.” Trading company

“I don’t see this being sustained, I see it as a short-term bump in an effort to change the downward momentum.” Manufacturing company

“It’s funny how they go up on speculation but are slow at lowering them on facts. Sounds like we are playing the stock market here!” Manufacturing company

“There is absolutely no reason for another price hike at this time. But, I guess, if you can, you do it.” Manufacturing company

“Not from a cost perspective, but with foreign offerings slowing down due to questions on section 232 and other trade barriers, mills are seeing some increase in interest for their products, helping to fuel and support the increases.” Service center

“Free market. They do not need to justify price adjustments. They will be tasked with collecting on them.” Service center

“I have a right to raise my prices as long as I can collect it; why shouldn’t they?” Service center

“Demand is flat and lead times are short.” Manufacturing company

“Artificially constrained supply is not a justification for raising prices.” Service center

“Demand is flat. Prices are starting to erode. Mill increase is just trying to prevent price slippage.” Service center

“Increases are based on anticipation of the 232 decision. Does that make them justified? More increases to come in the next 60 days.” Service center

“Justification is a reflection of which side of the buying/selling equation you are on. With the prospect of 232 ramifications and thus potential perceived supply constraints, then surely they are justified in taking advantage of the market forces ahead of time to maximize return. However, is it a true reflection of current supply and demand forces? Probably not.” Service center

“It is price gouging.” Service center

“It’s all about lead times. Once the June order book was filled, they wanted to pick up momentum heading into July, and stronger lead times allow them to stop the decline. Also, fear of the 232 case outcome helps.” Service center

“Right or wrong, most will take it when they can. Profit isn’t a bad word. If demand isn’t there, prices will fall back in line. It’s tough on manufacturers, who will struggle along. Historically, protectionism doesn’t work.” Manufacturing company

“Demand is slowing and customers are buying minimum quantities as they feel pricing will come down. May cause a squeeze in September/October. We will see.” Service center

“Make hay when the sun shines. Mills don’t have to justify their price decisions. If customers buy or not, it’s their decisions.” Trading company

“With 232 coming, several offshore offers have been put on hold. Also, if you need steel this year, you have to buy domestically if you don’t already have it in order. That said, input costs don’t justify an increase.” Service center

“’Justified’ is a relative term; they can charge whatever they think they can get. The market will evaluate the validity of the increase.” Service center

“Yes, at 73 percent capacity, mill lead time at five weeks, and the most expensive country producing steel.” Manufacturing company

“Raw materials prices are dropping. Section 232 has not happened yet. Most mills were desperate for orders until the threat of 232 became a little more likely.” Manufacturing company

“Demand is softer than expected. There’s lots of steel around, and mill order books are lighter than forecasted. Lots of cheaper foreign steel on land and in route.” Service center

“Lead times are pushing out due to large service centers restocking. Whether justified or not, mills will get the price increases. They are banking heavily on Section 232. If decisions are made that DO NOT help the domestic mills, we will be in a free-fall on prices as imports will pick back up quickly.” Manufacturing company

“SSC sales have weakened, end-user demand is entering the summer slowdown phase. Domestic mills are taking advantage of the 232 slowdown in imports.” Trading company

“My times have changed in a week. Most mills are going to be out into August by the end of this week. We need a resolution to the 232 cases to put the uncertainty in the market to bed.” Service center

“The fundamentals do not support the decision by the mills. They continue their bad habits of taking advantage of fundamentally unsupported situations and then cry uncle when the buy side has the opportunity to return the favor. I don’t understand why they choose the path of insanity and expect different results.” Manufacturing company