SMU Adjusts Price Momentum to Neutral

Our hot rolled price index peaked in mid-January at $610 per ton. Since then prices have receded to $585 per ton, which is where we pegged our HRC average earlier this week.

SMU has spoken to a number of steel buyers and steel mills over the course of this week and we are finding a growing pessimism in the ability of the mills to push prices higher right now.

SMU has had discussions with buyers who informed us that the domestic mills are taking a more aggressive approach on certain products. One buyer told us his galvanized base price was adjusted lower by $30 per ton earlier this week.

An executive from one domestic steel mill said he expects to see price erosion as they are beginning to have to compete with more import offers. This mill expects the Asian steel mills to become more aggressive due to the “coronavirus effect.” He added: “Not sure I will want to lose my hard gained biz.” This head of commercial told SMU he wonders if demand will be able to overcome some of the import temptation or if domestic numbers will need to be “tweaked” in order to discourage imports.

One service center told us they see the market as bouncing this year. They expect steel prices to remain “range-bound” moving up and down no more than $60 per ton.

Right now, SMU sees prices as having the potential to bounce until buyers and sellers are comfortable with demand, inventories and mill order books.

We will advise once we see momentum clearly moving in one direction or the other.