Steel Products Prices North America

Steel Buyers' Comments on Pricing...

Written by John Packard

Steel buyers weighed in today as Steel Market Update conducted our sweep of the markets to determine where spot prices are this week, and to see what is on the minds of the buyers. Here are some of the comments made to SMU earlier today:

A manufacturing company shared their perspective with these thoughts, “Where prices will go depends on the particular market. HR will go down into the $550’s before discount is applied, and a case can be made that we are already there. CR and HDG will directionally follow Houston imports. The HR/CR spread is uncomfortably high, but weakness in energy markets considered, the spread will likely remain high. We need oil at or over $60/bbl for the HR/CR spread to begin compressing back to more comfortable levels. Slab pricing from SE Asia and Brazil are both showing interesting levels of strength compared to Black Sea. It might suggest that there is a theoretical floor under pricing for material produced from re-rollers – at least for now.”

“Prices to move slightly lower – learned through negotiations,” said one service center.

Interesting comments from an agriculture and roofing panel manufacturer, “It seems like lead times are about the same, but our pre-painted number has risen $1.00/CWT each of the past orders as well. I feel like the pricing will continue to move higher, but I do not get the impression that the increases will be real aggressive. I feel like we are just getting back to pricing we likely should have seen in early Q4. I was surprised at the fall-off during that period. I also think many people in our specific industry (ag and roofing panels) have a good outlook for 2020 based on quotes in the hopper and contracts already signed for building projects in 2020. For certain that was the sentiment I got while talking with other folks in our industry at the IRE, and I know that resonates well here at our business. Hence, I believe most of us are willing to pay the smaller increases as we think we are getting ahead of some potentially more aggressive increase as the seasonal demand picks up in Q2.”

A wholesaler told us, “Coated seems to be lengthening somewhat. I think supply is fairly tight. Hot roll is still bouncing around six weeks. I think prices move sideways through February. If scrap goes up in March, we will likely see them try to push for another $40/ton.”

“Lead times are holding. I keep watching for them to decrease, but no visible signs yet. Mills on occasion delay reductions on their lead time sheets, which hides reduced order book. But the question remains: How are the mill bookings? Prices are slightly down due to buyer resistance. Consumption is down 15 months in a row, but mills have decent tonnage due to less imports,” said a service center.

Another service center told us, “There are some holes to fill. [Prices to move] sideways to lower. Demand seems to be lower than the mills expected.”

Still another SC reported, “Lead times are totally location dependent. There are some holes at certain facilities and others like AM Riverdale moved out 6-8 weeks within a one-week time period. Prices move lower from here; lack of demand.”

“Lead times vary from steel mill to steel mill. We have from mid-March to April ship dates. It appears that steel prices are starting to move down due to reduced order entry. We are hearing that the pipe and tube mills are backing off,” said one manufacturer.

A plate service center told us, “Pretty fragile – resale USA plate is $34-$35.50/cwt delivered base gauge A36. Import $32-$34, not much incentive. Mills want about equal to resale for replacement, so if price doesn’t move up (and I expect flat to slightly down) a current buy requires you to eat the freight. The only thing better than last year is that SC inventory values shouldn’t fall $300/ton this year.” 

A flat rolled service center said, “In the immediate term I expect lower prices, but with low velocity. I think the main question is whether or not we see that trend extend or whether we see a more pronounced drop. Mill output is still pretty robust and holding up at over 80 percent capacity utilization, and January imports are as strong as expected, with an influx of slabs. Demand seems weaker than we (and our customers) expected, so that is a concerning development.”

“If lead times are an indicator of market strength, then the mills are poised for more increases. I expect the mills to react shortly,” said another service center.

Another plate distributor said of prices, “Sideways to down. Q1 demand was pulled forward with Q4 buys. Scrap is falling. The demand environment overall is stable, but not robust.”

So, did those comments help you figure out which way prices on flat rolled and plate will be moving over the next few weeks?

If it sounds a bit muddled, then you understand why we have our Price Momentum Indicators on all flat rolled and plate at Neutral right now.


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