SMU Data and Models

Steel Mill Negotiations: Mills in the Driver's Seat
Written by Tim Triplett
February 25, 2018
Steel prices have been on the rise for the past four months, so it’s no surprise that steel buyers are reporting mills less willing to negotiate. More than 60 percent of respondents to Steel Market Update’s latest market trends questionnaire say mills are holding firm in price negotiations. About 10 percent say they still find some suppliers willing to talk price. The remainder have had mixed success in negotiating better buys.
By market segment, 83 percent of SMU respondents said the mills are holding firm on hot rolled steel orders, while only 17 percent have found mills willing to negotiate. That compares to 69 percent holding the line and 31 percent open to price negotiations on hot roll two weeks ago.
In the cold rolled segment, 31 percent said they have found some mills willing to talk price, while the majority (69 percent) reported mill prices on cold rolled as non-negotiable.
In the galvanized sector, it’s a 60:40 proposition today. About 60 percent of respondents said the mills are now standing firm on galvanized prices, while 40 percent said some mills are still open to negotiation on coated products. That’s about a 23 percent shift from a month ago when just 37 percent said mills were holding the line.
Most Galvalume buyers (58 percent) reported that mills are still open to price discussions, while 42 percent said mills are unwilling to compromise on Galvalume prices. One month ago, it was a 50-50 proposition whether Galvalume suppliers would have any flexibility on price.
The mills appear to be in the driver’s seat in the current market environment. As one buyer said: “In a conversation yesterday with a major steel mill, I was told we may see a price correction shortly. However, hot rolled black is on allocation and they could not even quote hot-dipped galvanized.”
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.

Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models

SMU Survey: Current Sentiment tumbles on tariffs, uncertainty, soft demand
SMU’s Steel Buyers’ Sentiment Indices moved in opposing directions this week. Our Current Steel Buyers’ Sentiment Index dropped to one of the lowest levels recorded in over five years, while Future Buyers’ Sentiment inched higher.

SMU flat-rolled market survey results now available
SMU’s latest steel buyers 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.” Past survey results are also available under that selection. If you need help accessing the survey results, or if […]

SMU Survey: Buyers report little change in sheet and plate lead times
Steel buyers report steady lead times for sheet and plate products, a soft-sideways trend we've seen since May.

SMU Survey: Mills remain flexible on pricing, buyers say
The majority of steel buyers responding to our market survey this week continue to say that mills are negotiable on new spot order prices. Negotiation rates have remained high since May.

Service centers: Mill orders improve in July
SMU’s Mill Order Index (MOI) moved higher in July after rebounding the month prior. The shift comes after mill orders declined from March through May.