SMU Data and Models
Steel Mill Negotiations: Mills in Comfy Position
Written by Tim Triplett
March 17, 2021
The mills are still comfortably in the driver’s seat when it comes to steel price negotiations. More than 90 percent of the buyers responding to Steel Market Update’s questionnaire this week reported that the flat roll and plate mills are unwilling to talk price on steel orders.
The only notable changes in the data this week were the percentages reporting on the amount of wiggle room in negotiations for galvanized and plate. In the case of galvanized, talks have loosened slightly as 9% of buyers said the mills were open to discounts, up six points from 3% early in March. In the case of plate, talks have tightened slightly as 9% of buyers said mills were now willing to negotiate, down eight points from 17% two weeks ago.
As long as steel demand continues to exceed supply by such a wide margin, steelmakers can easily sell all they produce and have no need to discount prices. Steel Market Update’s check of the market this week puts the current benchmark price for hot rolled steel at a new record of $1,300 per ton ($65/cwt). Other steel products are at similar historic highs.
Until mills add capacity and enough imports arrive to reach some equilibrium between supply and demand, steel prices can be expected to remain unusually high and steel mills unusually dominant in price negotiations.
Note: These negotiations data are based on the average from manufacturers and steel service centers who participated in this week’s SMU market trends analysis. To see an interactive history of our negotiations data, visit our website here.
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models
SMU’s April at a glance
SMU’s Monthly Review provides a summary of our key steel market metrics for the previous month, with the latest data updated through April 30.
SMU Survey: Steel Buyers’ Sentiment Indices recover
SMU’s Buyers’ Sentiment Indices both improved this week, reversing the decline seen two weeks ago.
SMU Survey: Sheet and plate lead times flatten out
Sheet and plate lead times held steady this week, according to buyers responding to the latest SMU market survey. This week we saw little change from mid-April levels, with just one product (Galvalume) showing any significant movement.
SMU Survey: More mills willing to deal on sheet prices, less so on plate
Nearly two thirds of the steel buyers who responded to this week’s SMU survey say domestic mills are negotiable on spot prices. This increasing flexibility marks a significant shift from the firmer stance mills held in recent months.
SMU Survey: Sheet lead times ease further, plate hits one-year high
Steel buyers responding to this week’s SMU market survey report a continued softening in sheet lead times. Meanwhile, plate lead times have moderately extended and are at a one-year high.