SMU Data and Models
Distributors Beginning to Move Spot Prices to End Users
Written by John Packard
March 10, 2019
Flat rolled steel service centers are beginning to support the concept of higher steel prices. Distributors are raising spot pricing to their end-user customers, and in the process, they are supporting the domestic steel mill flat rolled price increase announcements.
Steel Market Update canvasses the flat rolled and plate steel markets twice a month through the use of a questionnaire to end users, service centers, steel mills and trading companies. One of the important elements of our survey is to ask the manufacturing companies as well as the flat rolled steel distributors how service centers are handling spot pricing to the end users.
Last week, we found 38 percent of the manufacturing companies reporting their service center suppliers as raising spot prices. This is more than twice the percentage reporting the same way two weeks ago. At the same time, the percentage of manufacturing companies reporting spot prices as falling declined from 39 percent to 14 percent. At the beginning of February, 59 percent of these same companies were reporting spot pricing as falling from their service center suppliers. The percentage, as you can see below, was even higher through the fourth and early first quarters.
The service centers, responding independently from the manufacturing companies, reported similar results. Forty-one percent of the service centers responding to last week’s survey reported their company as increasing spot pricing to their spot customers. Only 10 percent of the service centers admitted their company was continuing to offer lower spot pricing to their customers compared to two weeks ago.
The graphic below depicts the service center results. The red ovals above the bars show the Nucor price increase announcements. Since late January, Nucor has announced $80 per ton in sheet increases.
Based on the results of last week’s questionnaire, SMU is of the opinion that there is some price momentum to take steel spot prices higher from here. The question is, how high can prices go? That will be determined by the need to buy inventory and the overall demand in the marketplace.
John Packard
Read more from John PackardLatest in SMU Data and Models
Steelmaking raw material prices trend higher in October
Steelmaking raw material prices strengthened for all but one product in October, a change in pace compared to recent months, according to SMU’s latest analysis.
Apparent steel supply eases in August
The volume of finished steel entering the US market declined in August from July, according to SMU’s analysis of data from the US Department of Commerce and the American Iron and Steel Institute (AISI). Referred to as ‘apparent steel supply,’ we calculate this monthly rate by combining domestic steel mill shipments and finished US steel imports and deducting total US steel exports.
September service center shipments and inventories report
Flat rolled = 60.8 shipping days of supply Plate = 52.7 shipping days of supply Flat rolled Flat-rolled steel supply at US service centers declined in September, though still seasonally high. September’s report reflects lower demand, stable lead times, and restocking early in the third quarter at a perceived bottom in prices. At the end […]
SMU market survey results now available
SMU’s latest steel buyers market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.” Past survey results are also available under that selection. If you need help accessing the survey results, or if […]
SMU survey: Steel Buyers’ Sentiment Indices diverge
SMU’s Steel Buyers’ Sentiment Indices moved in different directions this week. Our Current Steel Buyers’ Sentiment Index eased to a six-week low, while Future Buyers’ Sentiment ticked up to a four-week high. Both of our Indices continue to indicate optimism among steel buyers.