Steel Mills Call for Third Increase in Flat Rolled Prices

ArcelorMittal USA and AM/NS Calvert published the following minimum prices on sheet products: hot rolled, $600 per ton; cold rolled, $810 per ton; and coated products, $810 per ton.

The price increases may be reinforced by reductions in capacity. U.S. Steel has already idled two furnaces and other mills are reportedly considering similar moves. “Coupled with the expected idlings, this increase would be logical and lends credence to the theory that the rebound in pricing has more longevity than pundits would like us to believe,” commented on steel executive to SMU.

“If more capacity is taken out of the market in the next 60 days, this third increase might have legs. Rumors are everywhere about [various mills taking down furnaces]. If that becomes official, we could see some longer term support for pricing near $600. If not, we believe we slip back to the low $500 range in Q1,” said another source.

“I was a bit surprised at the timing of the announcement, but I do believe the mills have collected a good portion of the two increases already announced, lead times are definitely extended and there are still a sizable number of people that need to buy in the very near future. So, maybe the timing is correct,” said one service center executive in the Midwest. 

Service centers tell SMU they have raised their prices, but not to the full extent sought by the mills. “We have taken our spot prices up, but the success has been limited and quoting full spot pricing won’t land an order,” said one exec, expressing a common theme.

“The timing is probably about right considering scrap is forecast to be up about that amount in December and most mills are quoting January 2020,” commented another. “I’m not sure they collected all of the earlier increases, but they are being very bullish. We are raising prices to try to recoup the huge losses all year. Customers are pushing back, obviously.”

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“One of the rules of Industrial Purchasing 101, either the price is going up or its going down but rarely does it stay the same,” said another distributor. “This increase is a marketing move to enforce collection of the first two increases. The first is enforced by the second and the second is enforced by the third. When the mills fall out of step and stop matching each other, that means they are running out of upward momentum.”  

Steel Market Update places the current benchmark price for hot rolled steel at $535 per ton, up from $470 in mid-October. But the mills clearly have some work ahead of them to collect the full $600 they seek.