Steel Products Prices North America

A Discussion of Galvanized Base Price Availability

January 10, 2019

Steel Market Update faces unique challenges as we strive to “fairly” report market intelligence to the broader steel community. We understand that the consumers of our information are buyers, sellers and producers of steel and steel products. Of concern to our readers is the need to better understand flat rolled and plate steel prices and price momentum. SMU understands how important it is to the steel community to have a fair assessment of pricing, and to report what we discover to the steel community in a careful manner so as to not confuse or get ahead of where prices are actually moving.

This means SMU is actively conversing with buyers and sellers of steel on a continuous basis. We are probing into transactions completed, offers being made into the market and if new offers are moving in a direction different than what was seen a month, week or day earlier. We review foreign steel imports and their impact on the market both in terms of supply and price. We also probe to see if there are any special “foreign fighter” prices being made available by the domestic steel mills.

question Recently, SMU reported on a conversation with the head of commercial for a domestic steel mill. The conversation was about coated steel products, and we specifically discussed “foreign fighter” pricing on light-gauge steels that carry a lot of extras for thickness and width, as well as coating. The conversation referenced base price levels below the range published by Steel Market Update, and when we reported that we did a dis-service to our readers as we did not adequately explain that the mill was selling on a transactional basis, one specific item, very light-gauge with lots of extras and the competition was foreign steel. The transaction was a “non-repeatable” sale. In other words, the mill was taking a foreign order off the table. The final transaction price was acceptable to the mill at current market price levels and the actual base price does not have relevance to the broader steel market since it is not available on other items or other products.

We don’t know who said this originally, but everything is negotiable in life, including steel prices. There are many angles one can take to obtain the best price possible. Part of that process is having an understanding of costs involved in making steel, competitive pressures, relationships that you might have with a specific supplier, volumes, the needs of the producing mill, credit considerations, freight considerations and whether the mill has a hole in their schedule, etc. (by the way, these are things we discuss in our Steel 101: Introduction to Steel Making & Market Fundamentals workshops).

SMU Galvanized Base Price – Range and Average

On Tuesday, Steel Market Update published our galvanized base price range (low to high) and average for the week. This information was from data collected on Monday and during the day on Tuesday of this week. Since we were distributing one of our flat rolled and plate steel market trends questionnaires, we used data from the questionnaire as well as direct discussions with industry sources to produce our price range and average for the week. Our range was $39.00/cwt to $43.00/cwt with an average of $41.00/cwt ($820 per ton) base. This does not include extras for thickness and width, coating, quality, etc. All of our pricing is FOB the domestic steel mill, east of the Rockies. Our average is not a weighted average, but a simple calculation of adding the high and the low and dividing by two, which produces our average.

Today, we did a channel check with buyers and sellers of steel and we reviewed the data we continued to collect on the questionnaire. Neither our range nor our average changed.

We are seeing a concentration of base pricing in the $41.00/cwt to $42.00/cwt with a smattering of prices below $41.00/cwt and an even smaller number of price points above $42.00/cwt.

We continue to believe there are competitive pressures on galvanized (and other flat rolled products) and our Price Momentum Indicator is still pointing toward prices moving lower over the next 30 days. We discuss our flat rolled and plate pricing analysis coming from our questionnaire in other articles in tonight’s issue.