Market Data
Steel Mill Negotiations: It's a Seller's Market
Written by Tim Triplett
October 1, 2020
It’s a seller’s market as the mills hold firm in price talks on hot rolled, cold rolled and coated steel orders, while they seek to collect the higher prices announced this week in an improving market, according to respondents to Steel Market Update’s market trends questionnaire.
About 77 percent of the hot rolled steel buyers responding to SMU’s poll this week said the mills are not willing to deal on HR. That’s up from 61 percent a month ago, but down slightly from 87 percent two weeks ago. Only 23 percent said the mills are now willing to bargain to secure an HR order.
In the cold rolled segment, 72 percent said the mills are not willing to talk price. That’s up from 50 percent a month ago and 67 percent two weeks ago. The other 28 percent reported some room for price negotiation on cold rolled.
The percentages are similar in galvanized, where 33 percent reported the mills open to discounts, but the majority, 67 percent, said the mills are just saying no. Nearly all those responding to the question on Galvalume, 92 percent, reported little room for negotiation as supplies remain tight.
Talks have tightened a bit in the plate market, where the likelihood of mills negotiating is now a 50-50 proposition.
Benchmark hot rolled steel prices now average $605 per ton, based on SMU’s latest check of the market. That’s up sharply from $440 a ton six weeks ago. Steel prices continue to see strong upward momentum, as the mills announced $40-50 price increases on both flat rolled and plate this week.
Tim Triplett
Read more from Tim TriplettLatest in Market Data
Chicago Business Barometer improves but still contracts in October
The Chicago Business Barometer’s October reading still indicates a cooling in general business activity despite posting a surprise gain.
Drilling activity slows at October’s end in US and Canada
The latest Baker Hughes rig count report showed oil and gas drilling slowing in both the US and Canada last week.
SMU flat-rolled market survey results now available
SMU’s latest steel buyers market survey results are now available on our website to all premium members.
SMU Steel Demand Index improves but remains in contraction
SMU’s Steel Demand Index remains in contraction, according to late October indicators. Though growth faded at a slower pace, it rebounded from one of the lowest readings year-to-date from earlier in the month.
SMU Mill Order Index fell in September
SMU’s Mill Order Index declined in September after repeated gains from June through August. The shift came as service center shipping rates and inventories fell.