Service Centers
Service Centers Pushing Spot Prices Higher
Written by John Packard
December 8, 2013
The U.S. service centers are believers and, according to their customers as well as the distributors themselves, they are raising spot prices on flat rolled steel. It has been Steel Market Update’s opinion for quite some time that for domestic mill price increases to continue to rise the service centers need to support the increases and push spot prices higher.
Of the manufacturing companies responding to our most recent steel market analysis 65 percent reported service centers as raising spot flat rolled steel prices. Another 31 percent of the respondents reported prices as stable while a small fraction (4 percent) reported they were seeing lower prices out of the distributors.
Those reporting prices as rising increased by 5 percent compared to the beginning of November and by 57 percent when going back to the beginning of October.
Seventy six service centers responded that their company was increasing spot prices to their customers. This is up 6 percentage points from the middle of November and 8 points higher than early November. During the first week of October only 32 percent of distributors were raising spot prices at that point in time.
Below is a graphic we have shared with our readers on a number of occasions. Above the bar chart are the price increase announcements made by AK Steel. It has been our theory based on the data we have collected over time, that when the service centers capitulate (over 70 percent are lowering prices), as they were during the 4th Quarter 2012, it opens an opportunity for the domestic mills to raise prices. For prices to continue to rise the service centers need to support the increases (in other words they recognize their inventory costs are rising) and they push their spot prices higher. We continue to see continued strength for rising flat rolled steel prices and prices will most likely remain firm to moving higher until the distributors begin to grow inventories.
John Packard
Read more from John PackardLatest in Service Centers
Lehner lauds Ryerson’s entry into aerospace with Production Metals buy
Ryerson chief Eddie Lehner touted the company’s buy of Monroe, Conn.-based Production Metals, which heralds the company’s entry into aerospace.
Falling prices and lower demand hit Olympic Steel’s Q3 earnings
Olympic Steel remained profitable in the third quarter despite strong economic headwinds and pricing pressure across the steel industry.
‘Unprecedented stability’ in prices rules galvanized mart
The theme of “unprecedented stability” in pricing predominated among galvanized steel buyers this month.
Ryerson swings to Q3 loss amid difficult business climate
Ryerson swung to a loss in Q3 as it navigated a "contractionary" environment in industrial metals and manufacturing.
Reliance profits drop on lower prices and near-term uncertainty, better ’25 expected
Reliance Inc. reported a fall in third-quarter earnings, exacerbated by near-term election and demand uncertainty. With little relief expected through the end-of-year holidays, North America's largest metals service center group is looking ahead to better days in 2025.