SMU Data and Models

Negotiations: Mills Talking Price, Say Most Steel Buyers

October 5, 2017

Steel mills are even more open to price discussions than they were a couple weeks ago, which may be a reflection of weakening prices, say steel buyers who replied to Steel Market Update’s latest flat rolled market trends questionnaire. More than 100 executives responded to this week’s questionnaire. Steel buyers’ perceptions of their suppliers’ attitudes offer a snapshot of how steel mills are currently handling price negotiations.

Nearly 70 percent of respondents agreed that mill order books are weaker than expected and suppliers are open to price discussions. The percentage indicating mills are willing to negotiate is double what it was six weeks ago.

Another 29 percent of buyers characterized the market as mixed, with some mills flexible on price and others firm. Virtually none of the respondents reported that mills are currently unwilling to discuss price at all.

By product category, 95 percent of manufacturing and service center respondents saw mills willing to negotiate hot roll orders, up significantly from 70 percent a month ago. In cold roll, the percentage jumped to 89 percent who found the price negotiable, up from 66 percent a month ago.Galvanized saw a similar jump to 83 percent from 63 percent in September. In the Galvalume market, 89 percent report a willingness among mills to talk price on coated products, up sharply from 70 percent just two weeks ago.

Comments from some buyers confirm the downtrend in prices and uptrend in talks. “We have seen a $30 per ton drop on hot roll over the last three weeks,” noted one service center executive. “Mill order books are quite weak,” added another. “With scrap softening, buyers will demand further price concessions before placing orders.” Commented a third, “It depends on the mill, but overall they are hungry for orders.”

Note: SMU surveys active steel buyers twice each month to gauge the willingness of their steel suppliers to negotiate pricing. The results reflect current steel demand and changing spot pricing trends. SMU provides our members with a number of ways to interact with current and historical data. To see an interactive history of our Steel Mill Negotiations data, visit our website here.