SMU Data and Models

Mill Negotiations: Buyers Gain Pricing Power on HRC, Galv
Written by Michael Cowden
November 23, 2021
Steel buyers have gained a clear advantage when it comes to negotiating lower prices for hot-rolled coil and galvanized product.
The change in pricing power toward buyers – following a year in which mills could name their price – comes as prices for most products are down, lead times are coming in, and inventories are increasing.
SMU has also shifted its momentum indicators for all sheet products, and not just for HRC, lower.
The one product that mills were clearly less willing to negotiate price on was plate, where the dust is yet to settle on a recent round of price hikes.
That’s the takeaway from Steel Market Update’s latest survey. We ask buyers every two weeks whether mills are willing to talk price on spot orders.
Mills are willing to negotiate “in a small band,” one survey respondent said. “We’re still not seeing a willingness to tank the market.”
Others characterized mills’ willingness to negotiate on a broad spectrum from “very little” to “absolutely flexible.”
By the numbers, 75% of hot rolled coil buyers responding to this week’s survey said mills were more willing to negotiate lower prices to get an order. That’s roughly in line with our last check of the market.
The percentage of galvanized respondents reporting mills willing to negotiate was 52%, up from 43% in our last survey. That marks the first time since August 2020, when the market hit bottom after the COVID-19 outbreak, that more than half of galvanized buyers reported mills willing to consider lower prices.
Check out the rest of our data in the charts below:
By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden
Read more from Michael CowdenLatest 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.