SMU Data and Models
Steel Mill Negotiations: Talks Tighter
Written by Tim Triplett
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.
Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models
SMU’s September at a glance
SMU’s monthly review provides a summary of important steel market metrics for the previous month. This latest report includes data updated through Sept. 30.
SMU 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: Steel Buyers’ Sentiment Indices remain optimistic
SMU’s Steel Buyers’ Sentiment Indices remain in positive territory and continue to indicate optimism amongst steel buyers.
SMU survey: More buyers report mills willing to talk price
Over three quarters of the steel buyers participating in our market survey this week reported that mills are negotiable on new order prices
SMU survey: Steel mill lead times remain short
We saw a slight upward movement in some products compared to early September, but nothing substantial enough to signal a shift in the market.