SMU Data and Models

Mill Willingness to Negotiate Remains High

Written by Brett Linton

Once again, nearly nine out of ten steel executives reported that mills are willing to talk price to secure an order, according to buyers polled in this week’s steel market survey. Now standing at a five-month high, this high negotiation rate is similar to what we saw in early July. A high willingness to negotiate has been evident in our market checks since early May.

Every other week, SMU asks survey respondents: Are you finding domestic mills are willing to negotiate spot pricing on new orders? On average this week, 89% of steel buyers report that mills were willing to negotiate lower prices on new orders, up from a rate of 88% when we polled the market two weeks prior and up from 84% one month ago. Recall we saw negotiation rates as low as 16% in March.

Broken down by product, 94% of hot rolled buyers surveyed are now responding that mills were willing to negotiate lower prices, the highest rate seen since mid-February of this year. Cold rolled and galvanized respondents sing the same tune, with 93% of buyers reporting that mills are now negotiable. Willingness to negotiate on Galvalume products increased as well, with 89% reporting that mills are willing to negotiate this week, up from 80% two weeks prior and up from 50% one month ago. Note that Galvalume figures can be more volatile due to the limited size of that market and our smaller sample size.

Negotiations have been slightly less common in the plate market, with 54% of buyers reporting a willingness to negotiate this week. This is down compared to our two previous surveys when 64–67% of plate buyers report mills are willing to bargain. Recall we saw plate negotiation rates of 0–18% in March and April.

SMU’s Price Momentum Indicator remains at Lower since our adjustment on May 10, indicating we expect prices to decline over the next 30–60 days.

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 Brett Linton,

Brett Linton

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