SMU Data and Models
SMU's October at a Glance
Written by David Schollaert
November 6, 2023
Steel prices began to recover last month, ending a downward trend we’d been seeing since mid-April. Hot-rolled coil (HRC) prices ended October at an average of $810 per ton ($40.50 per cwt), having rebounded by $165 per ton during the month.
The SMU Price Momentum Indicator for sheet products pointed Higher, shifting from the Lower position as tags rallied in response to repeated mill price hikes throughout the month.
The Price Momentum Indicator on plate, which shifted to Lower at the close of September, continues to point Lower as tags have continued to show signs of weakness due to waning demand.
Raw material prices have fluctuated somewhat but were again mostly sideways last month. Scrap prices were largely flat on average in October, except for shredded and #1 HMS, which declined by roughly $10 per gross ton from September. Despite some movement mid-way through the month, zinc and aluminum spot prices were largely stable, remaining within historical levels. You can view and chart multiple products in greater detail using our interactive pricing tool here.
The SMU Steel Buyers Sentiment Index remained positive and recovered a bit, edging up during the month. Current Buyers Sentiment rose from +59 in September to +61 on average in October. Future Sentiment hovered at an average of roughly +75, up slightly from the prior month’s reading of +73.
Our Steel Buyers Sentiment 3MMA Index (measured as a three-month moving average) has been eroding over the past four months, falling to +58 in October from +59 the month prior.
Hot rolled lead times averaged 5.83 weeks in October, up from 4.63 weeks the month prior. SMU expects lead times to hover around current levels, but market chatter suggests they could increase in November should restocking occur for the first quarter of 2024, especially as the UAW strike looks to have ended. A history of HRC lead times can be found in our interactive pricing tool as well.
About 62% of HRC buyers reported in October that mills were willing to negotiate on prices, down from roughly 91% in September.
Key indicators of steel demand are still showing some signs of weakness overall and are nowhere near the bullish levels some had shown earlier in the year. While there are some backlogs in the energy and construction sectors, the potential end of the UAW strike on Detroit’s “Big Three” automakers could prop up demand into Q4 and early 2024, with an additional impact on steel prices.
See the chart below for other key metrics for October:
David Schollaert
Read more from David SchollaertLatest in SMU Data and Models
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.
SMU Scrap Survey: Current, Future Sentiment Indices log declines
However, in a month plagued by tariff and economic uncertainty, both current and near-term outlooks for our scrap survey respondents remained surprisingly optimistic.