SMU Survey: Widening Spreads in US vs Foreign Steel Pricing

When asked about the spread between domestic and foreign steel a majority of manufacturing company respondents (52 percent) as well as a large majority of distributors (67 percent) reported the spread wide enough to justify buying foreign steel.

We thought our Executive level readers might be interested in seeing what this looks like graphically and in a historical perspective. Here is a look at how service centers are feeling about the price spread right now:

 
Even though the price spread has been widening recently our respondents aren’t necessarily jumping on the foreign steel bandwagon (yet). We asked our respondents if their company was entering new foreign steel orders right now and only 33 percent of the service centers responded “yes” while 30 percent of the end users reported placing new foreign orders.

Here is what that looks like from a historical perspective using the service centers as the example.

We also work with the trading companies to see how they are seeing the domestic steel markets and their ability to be successful selling foreign steel at this point in time.

Trading companies reported foreign steel pricing as rising compared to one month ago (86 percent rising prices vs. 14 percent remaining the same).

Trading companies are seeing more requests for quotes from North American buyers as 57 percent of the traders reported more quotes.

71 percent of the traders reported foreign pricing as being made at levels where business can be transacted.

There is some confusion as to whether the trade cases will impact the ability of trading companies to conduct business and service their customers in the coming months. Seventy-one percent of our respondents reported the trade suits as having affected their ability to quote and service their U.S. customers. Even so, they were unsure whether the changes in trade and enforcement legislation would impact their ability to sell foreign steel into the U.S. (83 percent did not know yet while the balance did not believe the regulations would negatively impact their business).