SMU Data and Models

Steel Mill Negotiations: Talks Tighter

December 5, 2019

As flat rolled steel prices rise, it comes as no surprise that negotiations between mills and steel buyers continue to tighten. Responses to Steel Market Update’s market trends questionnaire this week indicate that mills are less flexible on price as they work to collect three increases announced since late October totaling $110 per ton.

In the hot rolled segment, the majority of buyers (56 percent) said the mills are no longer willing to negotiate prices on HR. The other 44 percent said the mills were still open to price talks. A month ago that ratio was reversed as more than 60 percent reported the mills were offering discounts.

In the cold rolled segment, the majority (62 percent) said spot prices are still negotiable. But that figure is down from 70 percent in early November.

Likewise, the majority of galvanized steel buyers (55 percent) reported the mills are still flexible when it comes to pricing galv orders, but down from 66 percent this time last month. Galvalume is the opposite, however, with the majority (67 percent) reporting mills unwilling to deal.

There’s been little movement in negotiations over plate in the past month, despite the $40 price hike announced in early November. Two out of three buyers responding to SMU’s poll said the mills are still discounting prices to win spot orders of plate steel.

Benchmark hot rolled steel prices have increased by about 18 percent in the past six weeks. SMU data shows the current HR price at $555 per ton, up from $470 in mid-October.

Price increases by the mills don’t necessarily curtail negotiations, but rather set a new, higher starting point from which the negotiations begin.

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 (example below), visit our website here.