Service Centers

Service Center Support for Spot Pricing Helping Mills Take Pricing Higher

April 10, 2016

Manufacturing companies were almost unanimous when asked what service centers were doing with prices to them right now. Eighty one percent of the manufacturing companies responding to our survey reported distributors as raising prices. As you can see by the graphic below this is a tremendous change in price direction and market pricing momentum. It is also SMU opinion that by raising spot prices to their customers service centers are also supporting the price increases being demanded by the domestic steel mills.

When we asked the same question of the service centers who responded to last week’s survey, we found an even greater percentage (97 percent) reporting their company as raising spot prices to their customers. The graphic below provides an even clearer picture as to the importance of distributor pricing support for the domestic mills to collect announced price increases. The back ovals represent the four price announcements made by AK Steel since the beginning of December (to date AK Steel has not followed the 5th announcement made by NLMK USA).

As long as service centers continue to increase spot pricing to essentially all of their customers, the better chance the domestic mills will have to move prices even higher from today’s levels.