SMU Data and Models
Steel Mill Negotiations Essentially Non-Existent
Written by John Packard
June 10, 2021
Steel buyers reported to Steel Market Update this week that the trend for steel mills to limit or totally remove any negotiations on spot steel prices continues.
Steel pricing power is totally in the hands of the steel mills as supply continues to be less than the demand for mill products.
Steel Market Update went out to steel buyers representing manufacturing companies and steel service centers, and they reported (again) almost unanimously that prices were being held firm with no wiggle room.
When we look at negotiations by product, we found 94 percent of our hot rolled respondents reporting no ability to negotiate with their steel mill suppliers. Cold rolled was 95 percent reporting no ability to negotiate. Galvanized, Galvalume and plate steel buyers were unanimous (100 percent) that there was no ability to negotiate spot pricing with their steel mill suppliers.
One major reason for the hard line taken by steel mills: extended lead times. In other words, mills have strong order books and do not need to entice spot buyers with lower prices to place new orders.
The SMU Steel Mill Negotiation data is derived from our flat rolled and plate steel market trends analysis survey which we conduct every other week. If you would like to become a confidential data provider please contact us at info@SteelMarketUpate.com. To see an interactive history of our spot price negotiations data, visit our website here.
By John Packard, John@SteelMarketUpdate.com
John Packard
Read more from John PackardLatest in SMU Data and Models
Steelmaking raw material costs mixed through May
According to our latest analysis, prices for four of the seven steelmaking raw materials we track increased from April to May. However, select materials saw a collective 1% decline month over month and are down 4% compared to three months ago.
SMU Survey: Buyers’ Sentiment tumbles as caution increases
SMU’s Buyers’ Sentiment Indices resumed their downward trend this week, erasing the modest recovery seen two weeks ago.
Service centers: Mill orders down further in April
SMU’s Mill Order Index (MOI) declined for a second straight month in April after repeated gains at the start of the year, according to our latest service center inventories data.
SMU Survey: Mill lead times edge lower
Sheet and plate lead times declined across the board this week, according to buyers responding to the latest SMU market survey. While our lead time ranges were unchanged compared to mid-April levels, average production times for each steel product we measure have declined from they were two weeks ago.
SMU Survey: Most buyers say price negotiations back on the table
Domestic mills are largely negotiable on spot prices, according to the majority of steel buyers responding to our latest market survey.