Market Data

Steel Mill Negotiations: Some Tightening?

January 18, 2018

The mills are clearly trying to collect the price increases they announced on flat roll in December and January, but they appear to be experiencing only some success. About 40 percent of steel buyers responding to the latest Steel Market Update market trends questionnaire say they have found their mill suppliers unwilling to negotiate on price. That compares to 25 percent reporting mills holding the line earlier in the month. So, talks have tightened up. On the flipside, however, that means that 60 percent of buyers are still finding some mills willing to talk price on certain products at least some of the time. When the majority view is that mills have some flexibility on price, what does that say about their ability to collect the latest increases?

Following are some buyers’ comments about mill negotiations:

• “Mills are very selective on negotiating.” Manufacturer/OEM
• “It depends on the products and quantity, etc. HRC is less negotiable, but coated more depending on the competitive situation.” Trading Company
• “It’s a mixed bag, but generally lead times are growing.” Service Center/Wholesaler
• “Yes, order books are firm, but they [mills] seem realistic that we aren’t at $35 just yet.” Service Center/Wholesaler
• “Mills in the South are unwilling to negotiate on spot tons.” Manufacturer/OEM
• “Order books are not firm, but there’s no negotiation.” Manufacturer/OEM

By market segment, 56 percent of SMU respondents say the mills continue to hold firm on hot rolled steel orders, while 44 percent report they’ve found mills willing to negotiate. That compares to 60 percent who reported the mills holding the line on prices in mid-December.

Half of cold roll buyers reported mills willing to dicker and half reported mills firm a month ago. This week, with little change, 54 percent said mills are open to price discussions, while 46 percent said prices are non-negotiable.

In the galvanized sector, it appears mills have loosened up a bit. About 63 percent of buyers say mills are negotiating on galvanized prices today, up from 51 percent of buyers in early January. Only 37 percent say mills are currently holding the line on coated products. In the Galvalume market, it’s a 50-50 proposition whether mills have any flexibility on price.

Note: SMU surveys active steel buyers twice each month to gauge the willingness of their steel suppliers to negotiate pricing. The results reflect current steel demand and changing spot pricing trends. SMU provides our members with a number of ways to interact with current and historical data. To see an interactive history of our Steel Mill Negotiations data, visit our website here.