Final Thoughts

For starters, there are still some planned outages underway. We’ve also heard of some unplanned ones that limited production at two sheet mills – one likely related to a software upgrade and another stemming from a power outage around Easter.

With nothing catastrophic occurring – no fires, no explosion, no injuries – they didn’t generate big headlines. But it appears to have been enough to tighten up the market around the margins.

At the same time, some market participants said that energy-related work has been stronger than expected- particularly in the South.

But it wasn’t enough to stop the slide

Even so, prices for hot-rolled coil are little changed compared to a week ago. Market participants said new capacity and certain smaller mills were selling larger HR orders (thousands of tons) in the mid/low $800s per short ton (st). More established mills continue to hold the line on smaller spot orders at around $950/st, they said.

Our understanding is that HR from several nations – among them Vietnam, Turkey, and Egypt – is being offered at $760-800/st for summer delivery to US ports. That could be exerting an influence on the low end of domestic prices and perhaps on futures prices as well.

But market participants tell us they aren’t eager to snap up those import offers with US prices trending lower, and the risk that US trade policy could change before the material arrives.

Meanwhile, the same factors that have been weighing on US sheet prices are still in place:

1. Uncertainty around demand and tariffs has buyers on the sidelines purchasing only as needed or to their contract minimums.
2. Scrap prices are expected to move lower in May.
3. Supply is expected to increase as mills get past outages (planned and otherwise) and as the summer doldrums start to take effect. Manufacturers, as usual, expect to take planned downtime in June and July.

What happens when mills open June?

Steel buyers tell us that mills have been trying to push a narrative that inventories are low and that a “buyers’ strike” is therefore risky – especially should everyone jump back into the market at the same time.

Buyers we spoke with generally acknowledged that inventories were lower now than at the start of this year. But few felt that their stocks were low by historic standards. (SMU’s service center inventory data supports that position.) They also anticipated buying less when they next step into the market given typical seasonality combined with concerns about weaker demand.

Some market participants think mill prices could move sharply lower as lead times stretch into June. The logic: Mills that have been disciplined around prices so far could come under pressure to increase volumes – which might compel them to be more aggressive on pricing. That said, some sources said big price cuts might not happen if mills don’t think it would stimulate buying.

On the coated side, meanwhile, there are concerns that galvanized base prices could come under pressure should a wide gap emerge between hot-rolled and cold-rolled base galvanized. That’s typically a risk in a slow market. And increased capacity could make that trend more pronounced this time.

Tariff-related noise aside, there is one basic factor keeping buyers on the sidelines. Despite recent declines, HR prices remain at historically high levels. And there is no obvious support to keep them there.

SMU Community Chat

Don’t forget to register for the next SMU Community Chat on Wednesday at 11 am ET with Bilstein Cold Rolled Steel CEO Brent Wilson.

We’ll talk about tariffs and the latest market trends as we usually do. We’ll also take a detour into a subject we don’t discuss as often – the dynamics between headquarters and subsidiaries, and how best to navigate that sometimes tricky relationship.

PS – Don’t forget to bring some good questions to the Q&A!