Steel Mills

HARDI Members Ask How Long Can Prices Remain High?

Written by John Packard

October 22, 2013

Pencil them in as non-believers. During our monthly steel conference call held with HARDI wholesalers who distribute steel sheet and coil, we were advised that it is only a matter of time before steel prices begin to falter. One of the wholesalers told the group, “…Forty dollars per hundredweight – How many months out of the last five years have [galvanized base] prices been that high? I am willing to bet not many….”

The discussion began with SMU and one of the service centers member companies pointing out the price increases announced at the end of September and through the first week of October. The service center told the group, “The CRU is up 15 percent since it bottomed in June. What is driving it [prices]? Inventories are very low; there is scheduled maintenance production which is taking capacity down. There are also leadership changes taking place at the mills. There is a separation between the mills and the mill buyers right now. The mills are trying to make a change.”

The wholesalers advised that the domestic mills have gained a portion of the galvanized increase since the beginning of the month but continue to negotiate pricing.

“At the mill level prices are up. I am not aware of any mill getting the full increase. They are getting some of the increase,” one wholesaler told the group.

The wholesalers continue to complain about service centers selling at price levels which indicate they are not paying mill price increases. One of the wholesalers surmised that the service centers selling into the HVAC market were continuing to use their CRU “minus” deals when selling into the HVAC spot markets.

If the CRU minus deals go away the wholesalers anticipate the market will become more volatile.

Demand was reported to be “good but not great” in the Southeast while the Northeast was reported to be the weakest region. The Toronto area and on the West Coast business was reported to be “solid.”

Although business appears to be better in most regions most of those on the call were not believers in prices continuing to go higher from here. The question being asked was not if prices will move lower but when….

“When the water clears supply and demand levels will come back into play and prices will fall,” is how one of the wholesalers put it to the group on the conference call.

HARDI = Heating, Air-conditioning, Refrigeration Distributors International.

John Packard

Read more from John Packard

Latest in Steel Mills