Service Center Spot Sales Pressure Mill Price Increases

Service centers reported similar results. The vast majority of the distributors responding (76 percent) reported spot prices remaining the same as they were two weeks earlier when we last canvassed the market. Twelve percent reported their company lowering spot flat rolled prices, while 11 percent report their company raising prices.

There have been three price increase announcements going back to June (one June, one July and one August) totaling $85 per ton. Based on the SMU steel index for hot rolled, only a portion of the increase has been collected (and that can vary from mill to mill). Most of the collection was done after the first increase. You can see in the graphic below that at least a portion of the service centers reacted by raising spot prices over a six-week period. After the second increase, there was no jump in distributors advising spot prices as increasing. We will have to watch carefully over the next couple of weeks to see if attitudes about spot pricing change at the service center level.

A note about the graphic shown above: The black ovals represent AK Steel price increase announcements. We use AK Steel as a reference point because they are the only steel mill that publishes their price announcements on their website. This allows both buyers and sellers of steel (and all of our readers) to check the AK Steel site for exact announcement dates and to confirm that our graphic is correct. Green bars represent service centers raising spot prices (percentage of the service center respondents who report their company as raising spot prices). Red bars are those reporting spot prices as decreasing. Blue, prices remain the same as reported two weeks prior.