SMU Data and Models
Service Center Spot Price Trend Shifting Away from Higher Prices
Written by John Packard
September 22, 2013
We heard it earlier this month when during our HARDI steel conference call the wholesalers complained of reduced margins due to competitive pressures and mentioned that there were a growing number of non-traditional galvanized suppliers competing for the mechanical contractors business.
During last week’s steel market review conducted by Steel Market Update (SMU), manufacturing companies reported seeing as many service centers lowering prices as those attempting to increase spot prices (see graphic). At the beginning of August a majority of manufacturing companies reported their service center buyers raising spot prices. Since then, the percentage shrank to 32 percent at the beginning of September and is now at 15 percent. The majority of manufacturing companies are reporting spot prices as being stable. By the way, the thumbnail graphics are “clickable” which will blow up the size for you to be able to read them better
The percentage of service centers reporting their spot prices as dropping increased from 5 percent at the beginning of September to 12 percent this past week. The percentage of distributors raising prices shrank from 35 percent to 27 percent while those reporting spot prices as remaining the same remained steady at 61 percent last week compared to 60 percent at the beginning of the month.
Steel Market Update believes the strength of the service center spot pricing is directly related to the ability of the domestic steel mills to collect price increases. The trend, at this moment, is moving away from distributors raising spot prices, most likely due to the belief that excess inventory will soon enter the market in the form of USS Lake Erie Works, ThyssenKrupp and AK Steel catching up on their late orders.
What may work to hold spot prices steady is the maintenance going on at ArcelorMittal, the hot strip mill outage scheduled for December at Nucor Berkeley and planned maintenance at Severstal Dearborn and Columbus.
John Packard
Read more from John PackardLatest in SMU Data and Models
SMU Survey: Sheet lead times ease further, plate hits one-year high
Steel buyers responding to this week’s SMU market survey report a continued softening in sheet lead times. Meanwhile, plate lead times have moderately extended and are at a one-year high.
SMU Survey: Buyers report more price flexibility from mills
Nearly half of the steel buyers responding to this week’s SMU market survey say domestic mills are showing increased willingness to negotiate pricing on new spot orders. This marks a significant shift from the firmer stance mills held in prior weeks.
SMU Survey: Buyers’ Sentiment Indices fall
Current Sentiment Index dropped six points to +42 this week compared to two weeks earlier. It has fallen in every successive survey since reaching a 2025 high of +66 on Feb. 19.
March service center shipments and inventories report
Steel service center shipments and inventories report through March 2024.
Apparent steel supply contracts in February
The amount of finished steel that entered the US market in February receded from January’s peak, according to our analysis of Department of Commerce and American Iron and Steel Institute (AISI) data.