Service Center Spot Prices Indicate Weaker than Normal Price Cycle

Manufacturing companies reported a slight uptick in service center spot prices – prices service centers are attempting to sell non-contract items to manufacturing companies on the open market – during the first week of January. Of the manufacturing companies responding to our survey, 25 percent – or a gain of 8 percentage points from the middle of December survey results – reported spot prices out of the distribution segment of the industry as rising. At the same time only 8 percent reported prices as decreasing up from 4 percent during the same time period. The balance reported spot prices as remaining the same.

What is interesting is to compare the results from our latest survey against the past two beginning of the year cycles to see how they compare. During the beginning of 2011 the steel industry went through a very strong spot market and pricing cycle and at the time manufacturing companies were consistently reporting throughout the entire first quarter higher spot prices from the service center segment of the industry. During the first week of January 2011, 85 percent of the manufacturing companies reported service centers as raising spot prices.