Will Latest Round of Price Hikes Stick?

· “Since scrap went up by $20 from July to August, steel prices should go up, as well. World scrap prices are up, so imported steel prices should go up, too. If they don’t, then it just emphasizes that production costs of imported steel have nothing to do with the price at which they are dumped in the USA.” Steel Mill

· “It’s hard to say exactly [if the price will stick] as huge inventories are arriving now from import. But I think inventories are low, so people must continue to buy. Mills will get orders and try to stick with some portion of the increase. Prices on imports are up due to cost increases in Asia, so there are no real great deals now and still lots of import risk. Domestics will get their share of business now and in the near future.” Trading Company

· “Nucor led the plate increase. Prices had deteriorated to levels nobody wanted. This increase has to stick.” Service Center/Wholesaler

· “Based on input costs increasing and prices in China increasing, there is a very good chance the price increase will stick. Demand will still play a role in the next month or so, which will impact the price domestically.” Service Center/Wholesaler

· “Some of it will stick due to scrap rising and the filling of inventory holes, but there’s not overwhelming demand.” Service Center/Wholesaler

· “Some will stick, perhaps $10 to $15.” Service Center/Wholesaler

The majority view, however, gives the latest price hike little chance of market acceptance:

· “I’m thinking not a chance in….” Service Center/Wholesaler

· “Not sure where this came from. Section 232 gave mills enough confidence to announce two increases. Now with 232 seriously delayed, we see another increase announcement? Doesn’t make sense to me.” Steel Mill

· “This is clearly another attempt by Nucor to prevent price erosion. While prices may stabilize for a week or so, I see very little chance of an increase sticking. The MSCI numbers from this morning are surely not encouraging from the mills’ perspective.” Service Center/Wholesaler

· “What justifies the increase? What event will cause end users to pay the increase? Where is the steel shortage to support a price increase? What service center wants to further reduce already depressed margins?” Service Center/Wholesaler

· “If it does stick, it will only be temporary. ROW pricing has already peaked. By tomorrow, ROW peak pricing will be yesterday’s news, AK will be the last to announce (again) and the U.S. steel market will be in a retreat again because of poor market fundamentals.” Manufacturer

· “We don’t feel any noticeable uptick in demand that would drive prices up. There’s an acknowledgement that some raw material inputs may be moving up for the mills, but this doesn’t seem to be enough pressure to push prices up.” Service Center/Wholesaler

· “Pricing always depends on demand. With scrap going up, it gives the mills justification. But I am of the opinion that customers pulled a lot of their orders forward due to trade case speculation. That might lead to a slowdown in September/October.” Service Center/Wholesaler

Written by Tim Triplett, Tim@SteelMarketUpdate.com