Mill lead times for spot orders of flat rolled steel have shortened slightly this month, though not yet enough to signal a definite trend. The current numbers suggest the mills are still maintaining relatively healthy order levels, but a change may be in the works. Lead times for steel delivery are an indicator of demand at the mill level. The shorter the lead time, the less busy the mill, and the more likely they are to negotiate on price.
Price negotiations with the mills have continued to loosen up as it’s rapidly becoming a buyer's market. The vast majority of service center and manufacturing executives responding to Steel Market Update’s questionnaire this week said the mills are open to price negotiations on nearly all products to win the orders.
Writen by: John Packard, President & CEO, Steel Market Update
On Tuesday I received a question about the SMU Price Momentum Indicator, which is currently pointing toward Neutral pricing over the next 30 days.
Yesterday (Wednesday) I received the following note from one of our readers after reading Tuesday evening’s issue of Steel Market Update:
After the early-February blip when SMU reported the foreign versus domestic hot rolled price spread as slightly widening, we now see that foreign prices have declined a bit more than domestic prices. As a result, the price advantage held by U.S.-produced HRC has begun to shrink again, meaning foreign import prices are somewhat more attractive to U.S. buyers, but still well behind.
The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel prices (delivered to U.S. ports) and domestic 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.
We are comparing the SMU U.S. hot rolled weekly index to CRU hot rolled weekly indices for Germany, Italy and the Far East (East and Southeast Asian port).
Reliance Steel & Aluminum announced a slew of records for its performance in 2019 and an increase in net income for the fourth quarter of 2019.