Steel Products Prices North America
September 29, 2015
Service Center Spot Prices Continue to be Under Pressure
Written by John Packard
Both manufacturing companies and flat rolled steel service centers reported the percentage of distributors offering lower spot pricing on flat rolled steels as growing. This is a key indicator followed by Steel Market Update (and no other publication) as falling spot prices out of the distributors are usually due to high inventories leading to competitive pricing pressures between distributors as they attempt to move excess items. This is also a sign of weakness at the mill level, as distributors are able to replace tons sold with less expensive steel.
As market prices continue to weaken, the percentage of service centers dumping high priced inventories grows until we hit a point of “capitulation,” which we have pegged at approximately 75 percent of distributors reporting their spot prices as being lowered. At this point, we traditionally have seen the domestic mills able to raise prices as the service centers realize they cannot continue to drop prices and survive and, therefore, begin supporting the move for higher prices.
