SMU Data and Models

Steel Mill Negotiations: Buyers Gain Leverage

September 6, 2018

Steel buyers appear to have considerably more leverage in mill negotiations than at any other point this year. Twice per month, in a proprietary poll, Steel Market Update tracks how buyers and sellers of flat rolled steel represent the mill negotiation position. Most buyers report that mills are willing to negotiate spot prices today.

According to respondents to this week’s market trends questionnaire, 87 percent of hot rolled buyers said they have found mills willing to talk price, up from just 18 percent two months ago, and up from 71 percent two weeks ago. Just 13 percent said mills currently remain firm on price.

In the cold rolled segment, 91 percent said they have found mills willing to negotiate, up from 67 percent in mid-August. Only 9 percent of respondents reported current mill prices on cold rolled as non-negotiable.

Likewise, prices on coated products appear to be flexible. In the galvanized sector, 87 percent said the mills were open to price discussions, compared with 75 percent last month. In Galvalume, 71 percent have found mills willing to negotiate, up from just 50 percent one month ago.

Clearly, talks have loosened in the past month or two. Whether it reflects normal seasonality in demand or some other factors at work is less clear.

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.