SMU Data and Models
Steel Mill Lead Times: Getting Back to "Normal"
Written by Tim Triplett
January 20, 2022
Steel mill lead times – a leading indicator of prices – continue to trend downward and are approaching what used to be considered “normal.” If lead times are nearing a point at which they may soon level off, what might that say about steel prices?
Steel Market Update’s check of the market this week puts the average lead time for hot rolled below four weeks for the first time since August 2020. Likewise, lead times for cold rolled and galvanized have shortened to about six and a half weeks over the past year and a half. Buyers polled by SMU over the past three days reported mill lead times ranging from 2-6 weeks for hot rolled, 5-8 weeks for cold rolled, 4-10 weeks for galvanized, 6-10 weeks for Galvalume, and 3-8 weeks for plate.
To appreciate how far lead times have come in, consider that the average mill lead time for hot rolled orders in 2019, prior to the pandemic, was 3.99 weeks – about where it is right now. In 2020, as the economy and steel market struggled with COVID-related disruptions, the average lead time stretched to 4.87 weeks. In 2021, the effect was even more pronounced with buyers waiting 8.69 weeks for their orders to be processed. But the average hot rolled lead time has shortened by nearly seven weeks since its peak last summer, and the trend is nearly the same for other steel products.
The latest survey shows that the average lead time for hot rolled has declined to 3.83 weeks from 4.69 two weeks ago. Cold rolled lead times now average 6.38 weeks, a decline from 6.99 in early January. Galvanized lead times dipped to 6.78 weeks from 7.21 in the same timeframe. The average Galvalume lead time is down by nearly a week to about 7.0 weeks. Mill lead times for plate are now at 5.17 weeks, down from 6.07 in SMU’s last check of the market.
Measured as a three-month moving average to smooth out the variability, the 3MMA is 5.26 weeks for hot rolled, 8.05 weeks for cold rolled, 8.26 weeks for galvanized, 8.83 weeks for Galvalume and 6.11 weeks for plate.
If declining lead times are a leading indicator of declining steel prices, and the correction in lead times has nearly run its course, then perhaps the price correction is further along the curve than some have predicted.
Note: These lead times are based on the average from manufacturers and steel service centers who participated in this week’s SMU market trends analysis. SMU measures lead times as the time it takes from when an order is placed with the mill to when the order is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our Steel Mill Lead Times data, visit our website here.
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models
SMU Survey: Mill lead times extend, buyers question sustainability
Buyers responding to our latest market survey reported longer lead times this week on all of the sheet and plate products SMU tracks.
SMU Survey: Very little wiggle room on mill pricing, buyers say
The majority of the steel buyers responding to our latest market survey reported that domestic mills are not open to negotiating prices on new orders this week.
SMU’s February at a glance
SMU’s Monthly Review provides a summary of key SMU steel market metrics for the previous month, with the latest data updated through February 28th.
Steelmaking raw materials more expensive in February
Prices for six of the seven steelmaking raw materials SMU tracks are increased from January to February, according to our latest analysis.
SMU Survey: Current Buyers’ Sentiment Index jumps, Future Sentiment slips
SMU’s Current Buyers’ Sentiment Index rocketed up this week, while the Future Buyers’ Sentiment Index edged down. The two indices are almost at parity.