Written by: John Packard
Are we seeing early signs of prices weakening?
The combination of our survey, which began on Thursday of last week and concluded earlier today, and our channel checks with both manufacturing and distributors produced a wider range in pricing than we had been seeing in recent weeks. Is this the beginning of the end of higher spot market pricing?
We were told by one large manufacturing company, which is an active player in both the spot and contract markets, that the new quotes for hot rolled for immediate orders are as low as $640 per ton for less than 1,000 ton lots ($630 for over 1,000 tons) at one end of the spectrum and at the other end they were being quoted $660 per ton from a large Midwest USA fully integrated mill. They told us there are ongoing negotiations with mills willing to sell at a “small discount to current prices – the problem is: what is the current price?”
The plate market is suffering and one of our sources advised us that they were able to purchase plate below the spot hot rolled coil price for the first time. Normally, plate sells at a premium to the HRC market.
SMU spoke above regarding the impact “bucket deals” were having on the spot markets – especially for light gauge galvanized going into the construction industry. This is beginning to cause issues with buyers who are reacting in different ways. SMU spoke with one buyer who admitted that their company purchased foreign steel in order to be competitive during the September/October time period. This is a company which in the past was a 100 percent domestic mill buyer. The buyer told us they could not compete at the requested $38.00/cwt base prices being asked for galvanized right now.
SMU Price Momentum Indicator has been set at “Higher” for a number of weeks. We have been asked if now is the time to revert to “Neutral,” indicating either a sideways market or an outright adjustment from Higher to Lower pricing. There are a couple of supply related issues which are preventing SMU from making that call but we warn our readers to be careful and watch all market signs over the next few weeks.
SMU just concluded our beginning of August steel market survey. In the survey we probe the question as to how willing the domestic mills are to negotiate pricing by product. Over the past few surveys the mills had been holding the line with very few negotiations. In the middle of July only 23 percent of those surveyed considered the mills as willing to negotiate hot rolled pricing. As of today that percentage has grown to 39 percent. On cold rolled the results from this week are similar as during the middle of July. Cold rolled was 29 percent in mid-July and is 31 percent this week.
The willingness to negotiate galvanized has grown from 35 percent in mid-July to 49 percent this week. Galvalume went from 11 percent in mid-July to 36 percent this week.
Here is how we are seeing prices this week:
Hot Rolled Coil: SMU Range is $620-$670 per ton ($31.00/cwt-$33.50/cwt) with an average of $645 per ton ($32.25/cwt) fob mill, east of the Rockies. The lower end of our range dropped by $15 per ton while the upper end of our range increased by $10 per ton. Our average is $2.50 per ton lower than one week ago. The largest percentage of buyers appears to be in the $630-$660 range and our understanding is the Midwest is stronger than the South or Eastern sections of the country. The trend for hot rolled is for prices to move marginally higher from here over the next few weeks.
Hot Rolled Lead Times: 3-6 weeks (also see article on lead times below).
Cold Rolled Coil: SMU Range is $730-$770 per ton ($36.50/cwt-$38.50/cwt) with an average of $750 per ton ($37.50/cwt). The lower end of our range dropped by $5 per ton while the upper end of our range increased by $10 per ton. Our average increased by $2.50 per ton compared to one week ago. The largest percentages of buyers are reporting prices of $740-$770 per ton based on our survey results just concluded this afternoon. The trend for cold rolled prices is for prices to be marginally higher from here over the next few weeks.
Cold Rolled Lead Times: 5-9 weeks.
Galvanized Coil: SMU Base Price Range is $36.50/cwt-$38.50/cwt with our average being $37.50/cwt plus applicable extras, fob mill, east of the Rockies. The lower end of our range dropped by $.50/cwt while the upper end of our range remained intact compared to last week. Our average is now $5 per ton ($.25/cwt) lower than the previous week. The percentages of buyers were fairly well spread between $37.00/cwt-$38.50/cwt with a slightly smaller percentage at $36.50/cwt. The trend for galvanized is for prices to be marginally higher than here over the next few weeks.
Galvanized .060” G90 Benchmark: SMU Range is $39.50/cwt-$41.50/cwt ($790-$830 per ton) with an average of $40.50/cwt ($810 per ton).
Galvanized Lead Times: 4-9 weeks.
Galvalume Coil: SMU Base Price Range is $36.50/cwt-$39.50/cwt with an average of $38.00/cwt plus applicable extras, fob mill, east of the Rockies. The lower end of our range declined by $.50/cwt and the upper end of our range increased by $.50/cwt, leaving our average unchanged from this past week. The largest percentages of respondents were at $37.50/cwt-$38.50/cwt. The trend for Galvalume is for prices to move marginally higher over the next few weeks.
Galvalume .0142” AZ50, Grade 80 Benchmark: SMU Range is $1031-$1071 per ton with an average of $1051 per ton.
Galvalume Lead Times: 5-8 weeks.
John PackardRead more from John Packard
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