Buyers Continue to Hold Upper Hand in Price Negotiations

Figure 2 below shows negotiation rates by various products. This week, 95% of hot rolled buyers responded that mills are willing to negotiate on price, in line with levels two weeks ago. This is one of the highest rates seen since February. Hot rolled negotiation rates have averaged 90% over the last three months.

88% of cold rolled respondents reported that mills were willing to talk price. This is down from 94% two weeks ago and down from 90% one month prior.

For galvanized buyers, 94% responded that mill prices are negotiable this week. This is down just 1% from two week ago. Recall that in late October our galvanized negotiation rate reached 96%, the highest rate recorded in over eight months. Galvanized negotiation rates have been 90% or higher since mid-September.

Galvalume negotiation rates tend to be more volatile due to the smaller market size. 67% of buyers reported that mills are negotiable on new orders this week. This is down from a rate of 100% two weeks prior, but up from 60% one month ago.

Negotiations have been slightly less common in the plate market. 60% of buyers this week reported a willingness to negotiate, up from 57% two weeks earlier, and up from 47% one month ago. Plate negotiation rates were as high as 80% in September. Recall we saw plate negotiation rates between 0–18% in March and April.

SMU’s Price Momentum Indicator was adjusted from Neutral to Lower on Oct. 11 for all products, and continues to remain at Lower, in consideration of increased supply, weaker demand, and lower raw material costs.

Note: SMU surveys active steel buyers every other week 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 Brett Linton, Brett@SteelMarketUpdate.com