SMU Data and Models
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Steel Mill Negotiations: Buyers in Strong Position
Written by Tim Triplett
August 6, 2020
Steel buyers maintain their strong position in price negotiations with steel makers as demand slowly recovers from the coronavirus. The vast majority of those responding to Steel Market Update’s questionnaire this week report that the mills are willing to compromise on price to win orders.
Nearly all the hot rolled buyers (91 percent) said the mills are open to price talks, while just 9 percent said the mills are standing firm on HR prices. That’s roughly the same percentage as two weeks ago.
In the cold rolled segment, 83 percent reported the mills willing to talk price, up from 77 percent two weeks ago.
In galvanized, 94 percent reported the mills open to discounting prices, a small increase from 88 percent in SMU’s last canvass of the market. About 67 percent found the mills willing to compromise on Galvalume prices this week.
Negotiations are common in the plate market, where 86 percent said the mills are now willing to bargain to capture the sale, while just 14 percent reported the mills saying no to discounts. That’s basically unchanged from two weeks ago.
Benchmark hot rolled steel prices have declined by more than $100 per ton since before the coronavirus and now average $450 per ton, based on SMU’s latest poll. The price increase announced by the integrated mills on July 21 does not appear to have stuck without the support of the EAF mills. About 70 percent of the steel buyers responding to SMU’s questionnaire this week said they believe flat rolled prices are near a bottom.
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.
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Tim Triplett
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SMU’s August at a glance
SMU’s Monthly Review provides a summary of important steel market metrics for the previous month. Our August report includes data updated through August 30th.
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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.”
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SMU survey: Lead times edge higher for sheet
Current steel mill lead time averages are a few days longer than levels seen one month prior, but remain near historical lows for both sheet and plate products.
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SMU survey: Steel Buyers’ Sentiment Indices surge
Both our Current and Future Indices are now up to multi-month highs, indicating continued optimism among steel buyers.
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SMU survey: Mills’ flexibility on prices up slightly
Steel buyers found mills slightly more willing to negotiate spot prices this week, according to our most recent survey data. Though this negotiation rate has ticked up vs. our previous market check, overall rates have been trending downward since July’s highs.