Steel Blog

Prior to the ArcelorMittal USA price increase announcement, Steel Market Update analysis of steel prices found flat rolled steel prices continuing their slow slog south (prices are moving lower). The pace has not accelerated, but there are questions as to whether some of the steel mills are cutting "quiet" deals in order to fill their fourth-quarter order book without giving the steel away.

One service center put it to us this way: "If you have index contracts, those prices aren’t that attractive, so my guess is some cheaper pricing must be out there to motivate anyone wanting to buy big volume right now. My guess is in the next two weeks there will be a lot of 'quiet deals' being done on volume to get December books full. For those who have learned that they can live comfortably with 2 months of inventory, even a so-called 'deal' right now isn’t that attractive, considering we could be entering a phase of lower input cost for an extended period."

We will have to wait and see if the ArcelorMittal price increase announcement has any impact on lead times or price negotiations with steel buyers. Steel Market Update is keeping our SMU Price Momentum Indicator as pointing toward lower prices over the short term. We will adjust the indicator to neutral as soon as another steel mill follows the ArcelorMittal lead. AM USA has done something interesting with their increase as they have identified the "minimum" base prices for hot rolled ($625 per ton), cold rolled ($825 per ton) and hot-dipped galvanized ($825 per ton). You can compare those base prices against what we are publishing for flat rolled steel prices for this week.

ArcelorMittal Raises Flat Rolled Base Prices

Wednesday, 18 October 2017 09:15

ArcelorMittal USA began advising their customers late on Tuesday (October 17, 2017) of their intention to raise flat rolled steel base prices. In an internal memo sent to the ArcelorMittal commercial team the mill advised, “All new opportunities for hot rolled, cold rolled and coated sheet products that require delivery in the 4th Quarter of 2017 should be specifically inquired for production availability before any formal or verbal acceptance of an order takes place.”

The mill then went on and advised that the following “minimum” base prices on sheet products are to be in effect “immediately”:

ArcelorMittal Raises Flat Rolled Base Prices

Tuesday, 17 October 2017 23:07

ArcelorMittal USA began advising their customers late this evening of their intention to raise flat rolled steel base prices. In an internal memo sent to the ArcelorMittal commercial team the mill advised, “All new opportunities for hot rolled, cold rolled and coated sheet products that require delivery in the 4th Quarter of 2017 should be specifically inquired for production availability before any formal or verbal acceptance of an order takes place.”

The mill then went on and advised that the following “minimum” base prices on sheet products are to be in effect “immediately”:



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SMU Price Ranges & Indices: Slow Slog South

Tuesday, 17 October 2017 17:45

Flat rolled steel prices continued their slow slog south (prices are moving lower). The pace has not accelerated, but there are questions as to whether some of the mills are cutting "quiet" deals in order to fill their fourth-quarter order book without giving the steel away.

One service center put it to us this way: "If you have index contracts, those prices aren’t that attractive, so my guess is some cheaper pricing must be out there to motivate anyone wanting to buy big volume right now. My guess is in the next two weeks there will be a lot of 'quiet deals' being done on volume to get December books full. For those who have learned that they can live comfortably with 2 months of inventory, even a so-called 'deal' right now isn’t that attractive, considering we could be entering a phase of lower input cost for an extended period."



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One of the questions we get regularly is what are steel buyers and sellers of steel saying about their business (demand) and inventory levels? Over this past week, Steel Market Update spoke with quite a few companies and asked them how they were seeing business and if their company was building flat rolled or steel plate inventories. A number believe flat rolled steel prices will return to their normal seasonal swoon in early fourth quarter, only to rebound when steel mill lead times reach into the New Year.



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One of the questions we get regularly is what are steel buyers and sellers of steel saying about their business (demand) and inventory levels? Over this past week, Steel Market Update spoke with quite a few companies and asked them how they were seeing business and if their company was building flat rolled or steel plate inventories. A number believe flat rolled steel prices will return to their normal seasonal swoon in early fourth quarter, only to rebound when steel mill lead times reach into the New Year.

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel import prices (delivered to USA ports) and domestic (USA) hot rolled coil prices (FOB Domestic mills). We want our readers to be aware that this is only a "theoretical" calculation as freight costs, trader margin and other costs can fluctuate, ultimately influencing the true market spread.

Our primary numbers for this analysis are from Platts as we compare European HRC export pricing (FOB Ruhr), Turkey HRC export pricing (FOB Turkey) and Chinese HRC export pricing (FOB Chinese port). Be aware that Chinese hot rolled pricing is not available to the U.S. market, so the Chinese spread is nothing more than an exercise in "what if." SteelBenchmarker is the secondary data provider of foreign hot rolled coil prices and is noted further down in this article.



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Some key price levels have been left in the dust when it comes to flat rolled and plate prices. On Friday of this past week, Steel Market Update (SMU) reduced the lower end of the range on hot rolled and our average dropped below $600 per ton. This week our HRC took a hit on the upper end of the range and our benchmark average is now $587.50 ($588).



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SMU Adjusts Lower End of Hot Rolled Pricing

Sunday, 08 October 2017 15:29

On Tuesday of this past week, Steel Market Update (SMU) advised our readers that our range on hot rolled pricing was $580-$630 per ton with an average of $605 per ton ($30.25/cwt). As the week progressed, we received more information that has caused us to drop the lower end of our range to $560 per ton ($28.00/cwt) and our average is now $595 per ton ($29.75/cwt) based on our new range being $560 to $630 per ton.



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Service Centers Lowering Spot Prices

Sunday, 08 October 2017 14:59

Over the course of the first four days of this past week (the week of Oct. 2, 2017), Steel Market Update conducted our early October flat rolled steel market trends analysis. One of the areas we track is how steel service centers are handling spot prices on flat rolled steel being sold to their customers. A growing percentage of manufacturing companies and flat rolled steel distributors reported service centers as lowering spot prices.

In SMU's opinion, based on watching flat rolled steel spot prices out of the service center segment of the industry, the distributors' support for spot prices is an important signal for prices in the greater flat rolled market – including for steel mill pricing.

The service centers are taking their spot prices lower, which is an indication of growing inventory levels and/or slowing demand.

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