SMU Data and Models
Steel Mill Negotiations: Buyers Still Have the Upper Hand
Written by Tim Triplett
February 3, 2022
With steel prices continuing to plunge, buyers clearly hold the upper hand in price negotiations with the mills – a position they have enjoyed for the past two months as seen in the upward slope of the green bars in the chart below.
Every two weeks, Steel Market Update asks readers: Are you finding the domestic mills willing to negotiate spot pricing on new orders placed this week? The vast majority of respondents in every product category report the mills willing to make a deal today in order to close a sale.
“Every week, the number is lower,” said one buyer: “Yes, they negotiate, but only to a certain degree. They are still trying to hold the line a bit,” added another.
Why do buyers have such a dominant negotiating position. Steel Market Update’s check of the market this week puts the average hot rolled price at $1,235 per ton ($61.75 per cwt), down by $100 per ton from last week and a decline of more than $700 per ton since last fall. With so many buyers staying on the sidelines to see how low prices go, mills almost without exception are open to discussing discounts. SMU will be keeping a close watch on when negotiations begin to tighten up as a sign that steel prices may be nearing a bottom.
Note: SMU surveys active steel buyers twice each month to gauge the willingness of their steel suppliers to negotiate pricing. The results reflect current steel demand and changing spot pricing trends. SMU provides our members with a number of ways to interact with current and historical data. To see an interactive history of our Steel Mill 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 June at a glance
A look at SMU data for the month of June.
SMU Survey: Buyers’ Sentiment rebounds from multi-year low
Both of SMU’s Steel Buyers’ Sentiment Indices edged higher this week. Current Sentiment rebounded from a near five-year low, while Future Sentiment rose to a two-month high
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 Survey: Sheet lead times pull back after early-June blip, plate holds
Following the uptick seen two weeks ago, lead times eased this week for all four sheet products tracked by SMU, while plate lead times held steady, according to this week’s market survey.
SMU Survey: Pricing power abruptly shifts to steel buyers
The majority of steel buyers responding to our latest market survey say domestic mills are more willing to talk price on sheet and plate products than they were earlier this month. Sheet negotiation rates rebounded across the board compared to early June, while our plate negotiation rate hit a full 100%.