Steel prices in the North American markets continued their move higher this week. Mills took offers for lower priced product off the table at the end of last week according to Steel Market Update sources. Many buyers are “non-believers” and do not think the new prices which are pushing $680-$700 on hot rolled, $800 for cold rolled and a galvanized base price around $800-$820 per ton.

Our indexes have not yet reached the new “announced” numbers referenced above as negotiations continue and those mills with shorter lead times or holes in their schedules work to fill their order books. The amount of flexibility in negotiations seems to have been tempered over the past few working days as open quotes expired and the move by the domestic mills has been to move their prices up.

As one 30+ year veteran of the steel business told Steel Market Update earlier this week, “I have never seen a steel market like this in my life. The mills announce a price increase which is high and this enables them to collect all of the previous announced increases at a time when the order books are not that strong.”

From our perspective, speaking with hundreds of manufacturers, service centers, trading companies and a few mills, many are amazed how the domestic mills can run at less than 70% of capacity and continue to collect price increases. The reality of the situation is there is no competition from foreign steel and steel input costs are moving higher. All of which combined means the trend for prices – the Market Momentum – continues to be for higher prices over the short term.

Longer term the question is how large will the bubble be when it burst?

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