Service Centers Lowering Spot Prices

The service centers are taking their spot prices lower, which is an indication of growing inventory levels and/or slowing demand.

Thirty-nine percent (39 percent) of the manufacturing companies participating in last week’s analysis reported their service center suppliers as lowering spot prices compared to what they were seeing just two weeks earlier. This is up 12 percentage points from mid-September.

Service centers participating in last week’s analysis agreed with the manufacturers as 40 percent of the distributors reported their company as lowering spot prices. This is up 33 percentage points compared to the mere 7 percent reporting falling prices two weeks earlier.

We have one more graphic that we share with our readers/members and that shows mill price increases against service center spot pricing. (We use AK Steel announcements as the benchmark since they publicly announce their increases on their website.) As you can see by the graphic below, there has been tepid support for any mill price increase announcements going back to late first quarter 2017. Without service center support, market pricing has been relatively flat over the course of 2017. The last strong price move was in mid to late October 2016 when prices bottomed at $470 and then rose to $625 per ton by mid-January 2017. During that time period, at least 85 percent of the service centers were reporting higher spot prices to their customers (thus supporting the mill increases).