SMU Data and Models
Steel Mill Negotiations: Buyers Still Have the Upper Hand
Written by Tim Triplett
February 3, 2022
With steel prices continuing to plunge, buyers clearly hold the upper hand in price negotiations with the mills – a position they have enjoyed for the past two months as seen in the upward slope of the green bars in the chart below.
Every two weeks, Steel Market Update asks readers: Are you finding the domestic mills willing to negotiate spot pricing on new orders placed this week? The vast majority of respondents in every product category report the mills willing to make a deal today in order to close a sale.
“Every week, the number is lower,” said one buyer: “Yes, they negotiate, but only to a certain degree. They are still trying to hold the line a bit,” added another.
Why do buyers have such a dominant negotiating position. Steel Market Update’s check of the market this week puts the average hot rolled price at $1,235 per ton ($61.75 per cwt), down by $100 per ton from last week and a decline of more than $700 per ton since last fall. With so many buyers staying on the sidelines to see how low prices go, mills almost without exception are open to discussing discounts. SMU will be keeping a close watch on when negotiations begin to tighten up as a sign that steel prices may be nearing 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, visit our website here.
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models
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.
SMU survey: Mill lead times stretch out marginally
Steel mill lead times inched up this week for most sheet and plate products, according to buyers responding to our latest market survey.