Market Expects More Mill Announcements to Stop Price Slide

As Steel Market Update (SMU) checked with various market sources after the AK Steel price announcement we found most of the industry expecting the other domestic steel mills to follow the AK Steel pricing lead. At the same time, most buyers expect the net result to be an end to the current slide in pricing – if only for a short period of time – before market fundamentals kick back in.

The head of corporate purchasing for a large service center organization pegged the AK Steel announcement as putting their new base price at $31.00/cwt ($620 per ton) which may be one of the reasons why the other mills are hesitating with making announcement of their own (they are already close to or above $620 per ton). This executive told us, “It will be good for the industry for the rest of the mills to follow. Even so, negotiations will continue to go on. I don’t see prices going to $33.00 [$660 per ton].”

The manufacturing company who reported the preparations of the increase to SMU last week told us today, “…generally low inventories at most steel consumers should increase order flows if people believe lead times will move out. I’m not sure everyone is willing to believe that at this point…” This manufacturing company went on to say, “…I expect prices to move temporarily. The current fundamentals of, overcapacity, inventory aversion and an uncertain business climate trump all the old tricks that have worked in the past.”

SMU heard from both manufacturing and service centers that demand has been steady but not necessary stellar. As one service center told us, “There is no change in demand. It’s OK – it hasn’t fallen – that’s a good thing. Nobody’s panicked, nobody’s worried.”