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

Apparent steel supply remains elevated in July
Apparent supply totaled 8.88 million short tons (st) in July, down 38,000 st from June and 6% higher than the same month last year

HRC vs. prime scrap spread narrows slightly
The price spread between prime scrap and hot-rolled coil (HRC) narrowed by a hair this month, according to SMU’s most recent pricing data.

SMU Scrap Survey: Current Sentiment rises as Future Sentiment falls
SMU’s current Scrap sentiment index increased this month while future sentiment declined, according to our latest ferrous scrap survey data.

SMU scrap market survey results now available
SMU’s September ferrous scrap market survey results are now available on our website to all premium members.

SMU Survey: Sentiment inches up from low levels
SMU’s Steel Buyers’ Sentiment Indices ticked higher this week, according to the latest data from our flat-rolled steel survey.