SMU Data and Models

Steel Mill Negotiations: More Tons Than Buyers

Written by Tim Triplett

April 16, 2020

It’s a buyer’s market with many buyers sitting on the sidelines waiting for federal and state officials to declare the coast is clear and open up the economy once again. Not surprisingly, steel mills are very willing to negotiate to secure orders in the current low-demand environment. More than nine out of 10 buyers responding to Steel Market Update’s questionnaire this week said the mills are now talking price on all types of products. The percentages have jumped by about 20 points since this time last month, but have stayed about the same over the past two weeks.

In the hot rolled segment, 95 percent of the steel buyers said the mills are willing to negotiate prices on HR, up 22 points since mid-March, but just 2 points since early April. In the cold rolled segment, 88 percent reported the mills willing to talk price, down from 96 percent two weeks ago. In galvanized, 93 percent reported the mills open to negotiation, up 3 points from the 90 percent earlier in April. Similarly, 89 percent said they have found mills willing to compromise on Galvalume prices, up from 83 percent in the last poll.

The tone of negotiations in the plate sector has gotten even more buyer-friendly as about 92 percent said the plate mills are now open to negotiations, versus 83 percent earlier in the month. Just 8 percent said mills are still holding firm on plate prices.

The benchmark price for hot rolled steel dipped below $500 per ton this week and is down by $115 per ton from its recent peak in January. Mills have cut capacity in an effort to sync supply with demand, but it appears there are still more tons than there are active buyers in the market.

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 (second example below), visit our website here.

Tim Triplett

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