SMU Revises Price Momentum Indicator Back to Neutral

It has become apparent that a mill price announcement is imminent. We are being told to expect an announcement of $40 per ton as early as this week.

The announcement is expected by some to be nothing more than an effort to stop the erosion of spot flat rolled pricing.

Others, like the manufacturing steel buyer below, believe the market is tight enough to justify higher prices:

“I feel like a price increase is imminent and the market will turn higher. Demand is really improving in the South. Scrap will go up, and a number of mills are coming up on planned outages. Border wall is under way and Nucor Tubular has most of that business. Speaking of Nucor, their business is strong and they feel like a price increase will be supported, but they know back-to-back increases in quick succession won’t look positive to their customers. They are in the third week of April now with most of their mills on HR lead time. Planned outages: Nucor Decatur 6 days in March, Nucor Berkeley 6 days late March. In hot rolled, BRS lead time just pushed out to second week of April, I was told. SDI Butler is into May HR lead time due to outage. SDI Columbus just went into the third week of April, I’m told as well. Galvanized orders books are real strong across all mills in the South; all quoting May lead time now. It seems like the mills are in a pretty good spot and, with scrap set to go up, an increase should be supported. My two cents.”

Not every industry is reporting strong demand. We have had conversations with a few service centers in the Midwest over the past few days who are reporting shipments as being “disappointing” in February, and that demand seems to be slower than what was felt in January.

So, the market is in a gray area and we feel our Price Momentum Indicator on flat rolled should reflect that uncertainty.