SMU Data and Models
SMU Survey Says: Steel Mills Willing to Negotiate Spot Pricing
Written by John Packard
September 25, 2016
Spot steel prices are now negotiable on hot rolled, cold rolled, galvanized and Galvalume according to those responding to our mid-September 2016 flat rolled steel market trends survey.
Hot rolled continues to be (almost) unanimous with 97 percent of our respondents reporting spot prices are being negotiated by their mill suppliers. At the beginning of this month we reported 100 percent as saying prices were negotiable. The last time we were at 50 percent or less we have to go back to the beginning of July. As you can see by the graphic we have provided, it appears clear that the late June/early July timeframe was when the market began to change from a seller’s market to one being controlled by buyers.
Eighty-seven percent of those responding to last week’s survey on cold rolled advised that CR spot prices are now negotiable.
SMU is reporting 85 percent of those responding to our flat rolled survey as indicating hot-dipped galvanized spot pricing as being negotiable at the domestic steel mills (USA and Canada).
Galvalume has been the most resilient of the flat rolled products covered by SMU. We did not see a large jump in the responses advising that prices on AZ were negotiable until the beginning of September. We believe this could be due to the much smaller number of market respondents we have on Galvalume than on the other three flat rolled products. This past week 75 percent of those responding reported AZ spot prices as negotiable.
We believe that there is a relationship between lead times (which have been shrinking since early July on most products) and the willingness of the steel mills to negotiate their spot numbers.
A side note: The data for both lead times and negotiations comes from only service center and manufacturer respondents. We do not include commentary from the steel mills, trading companies, or toll processors in this particular group of questions.
To see an interactive history of our Steel Mill Negotiations data, visit our website here.
John Packard
Read more from John PackardLatest in SMU Data and Models
Steelmaking raw material prices ease in July
The majority of steelmaking raw material prices declined in June, following the same trend seen in May, according to SMU’s latest analysis.
SMU price ranges: HR declines moderate. Are we near a bottom?
SMU’s sheet price ranges slid again this week. But the declines were more pronounced on tandem products whereas prices for hot-rolled coil held roughly steady.
Some SMU Key Market Indicators improve, others remain near historic lows
SMU’s Key Market Indicators include data on the economy, raw materials, manufacturing, construction, and steel sheet and long products. They offer a snapshot of current sentiment and the near-term expected trajectory of the economy. All told, nine key indicators point lower, 16 are neutral, and 13 point higher. One thing worth noting: The nine indicators pointing lower are all lagging indicators. Many of those pointing upward are leading indicators.
SMU survey: Steel Buyers’ Sentiment Indices rebound
SMU’s Steel Buyers’ Sentiment Indices both saw improvement this week. Current sentiment ticked higher but remains near the four-year low seen earlier this month. Future Sentiment continues to indicate that buyers are optimistic for future business conditions.
SMU market survey results now available
The latest SMU market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.” Historical survey results are also available under that selection. If you need help accessing the survey results, or if your […]