SMU Data and Models
SMU Market Trends: Spot Prices Poised to Decline?
Written by Tim Triplett
August 26, 2018
Sixty-two percent of those responding to Steel Market Update’s latest market trends questionnaire believe steel prices on the spot market are on the decline. Another 35 percent expect prices to remain the same. Only 3 percent feel steel prices could still move higher.
SMU has adjusted its Price Momentum Indicator to Lower, meaning prices are expected to decline in the next 30-60 days. The benchmark price for hot rolled coil dipped by $5 per ton last week to an average of $885 per ton. Cold rolled prices saw a similar drop to $985 per ton, while the base price for galvanized declined by $10 to $985.
What is likely to happen to steel prices from here? Following are some of the respondents’ more insightful (anonymous) comments:
- “We expect hot rolled coil prices to decrease slightly by year end. Plate will stabilize for the balance of this year.”
- “We see a slight correction of perhaps down $40.”
- “Mills will start posturing soon for contract season, but I think their order books are soft.”
- “Spot deals will be coming to keep tons booked, but I’m not sure how much prices will go down. It depends on lead times and how far out the mills are. If they get too short, more deals will be made.”
- “With scrap probably declining, I do not think prices will go higher in the short term, unless there are labor issues that constrain supply. I think pricing has bottomed for the next few months.”
- “Prices will drop, but not as quickly as the futures market predicts.”
- “If steel demand causes shortages, prices will rise. If demand remains normal, prices should fall slightly.”
- “Domestic prices have dropped, and I expect foreign to start doing so, as well, as futures prices are now $25-40 per ton lower than domestic. It’s not worth the risk right now!”
- “Mills can’t help competing against themselves.”
Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models
SMU Survey: Steel Buyers’ Sentiment Indices contrast at year end
Both of our Sentiment Indices remain in positive territory and indicate that steel buyers are optimistic about the success of their businesses.
SMU Survey: Mill lead times contract slightly, remain short
Steel mill production times have seen very little change since September, according to buyers participating in our latest market survey.
SMU Survey: Buyers report mills are slightly less flexible on pricing
Steel buyers of sheet and plate products say mills are still willing to bend on spot pricing this week, though not quite as much as they were two weeks prior, according to our most recent survey data.
December energy market update
Trends in energy prices and active rig counts are leading demand indicators for oil country tubular goods (OCTG), line pipe and other steel products
Apparent steel supply remained near two-year low in October
Referred to as ‘apparent steel supply’, we calculate this volume by combining domestic steel mill shipments with finished US steel imports and deducting total US steel exports.