Flat rolled steel price momentum, for spot pricing out of the domestic mills, continues to be in transition, and the SMU Price Momentum Indicator is at Neutral. Neutral means spot mill pricing could go in either direction over the next 30 days. However, SMU and our parent company CRU have both been reporting lower spot prices on benchmark hot rolled coil. This week the SMU HRC average was down $15 per ton at $500 per ton, FOB domestic mill, east of the Rockies.
Plate buyers are telling SMU that spot plate pricing appears to be firmer than flat rolled, although the longer-term view is mixed, so our Price Momentum Index on plate is also at Neutral. SMU’s discrete plate average was up $10 per ton this week compared to last. We reported our plate average at $610 per ton delivered.
Earlier this week we reached out to a few dozen flat rolled and plate steel buyers to gather information about pricing and price momentum. We asked the following question: “Do you believe price momentum is now on the side of the steel mills, or do you think price momentum is not well-defined right now?”
Flat rolled steel buyers provided the following feedback:
“Still in favor of the mills but perhaps only barely. We’ve moved into a ‘lull’ period currently where there’s a risk that the momentum could shift back to buyers and prices weaken. Buyers appear to be very satisfied with their positions currently and not very active in the spot purchase market. The most recent industry reports as of 5/31 showed that on-order quantities at the mills jumped higher than expected, and this may help to explain why things are more sluggish than expected. On the plus side, weekly mill output and imports are very stable and therefore this makes increasing demand, and the timing of the same, key to where we head to in the near term. A good chunk of that increasing demand will come from the ramp-up of automotive production, which has been hampered to some extent by supply chain interruption issues. Where the auto ramp-up goes over the next 4-8 weeks will likely be the key to where the sheet market goes as well.” Service center
“It still rests with the buyers mostly. With more capacity appearing to be coming on, Covid cases rising, auto opening, and scrap becoming more available keeping cost down, I feel we will have a buyer’s market well into Q3 and possibly into Q2 of next year.” Service center
“It’s a buyer’s market with minimills, but issues with BOF mills due to capacity utilization.” Service center
“Pricing is totally unworkable for HRC. I am hearing mills struggling at $25/cwt and discounting extras to try to secure orders. The market for coated last week was in the range of $31.50 to $33.00/CWT and I sense that it’s not better this week. Mills have lost the momentum and no doubt will restart additional capacity, making it will be a buyer’s market for some time.” Service center
“Momentum is not well defined; demand is still in question.” Service center
“I see mills backing off their announced increases.” Service center
“Not well defined. Several mills have holes for specific products and are willing to negotiate price. The slitters in my area are out of storage space as the minimills have negotiated volume deals with several to get orders with short lead times.” Manufacturing company
“I think it is shifting more every day towards the mills’ favor. IF, that is a big IF, they can keep the blast furnaces down for another month or two, they will solidify Q3 and maybe beyond.” Service center
“The demand is truly not there for mills to continue to get price increases; pricing momentum is not well defined.” Service center
“I see a stagnant market for the next 30 days or so, then minor weakening.” Service center
Plate steel buyers provided the following feedback:
“Mills are very firm on #, not seeing a lot of wiggle room.” Plate service center
“Not well defined. The integrated mills are stuck. They need higher prices, but demand is probably not strong enough to justify more capacity.” Plate and flat rolled service center
“Prices dropped too low. They need to increase even during the summer months when they historically don’t. These last two increases ($40 + $40) need to get collected.” Plate service center
SMU evaluates pricing and price momentum on a weekly basis (if not more, depending on how active the market is). We will be conducting one of our flat rolled and plate steel market trends surveys beginning on Monday of this coming week. We provide our price momentum indicators for hot rolled, cold rolled, galvanized, Galvalume and plate steels on Tuesday evening in our price indices article.
John PackardRead more from John Packard
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