SMU Price Momentum Indicator Pointing Toward Higher Steel Prices

Flat rolled steel pricing momentum is clearly on the side of the domestic steel mills. You have a number of the integrated mills essentially out of the spot markets and lead times are extended. Even hot rolled lead times are moving out despite weakness in the energy markets. SMU Price Momentum Indicator continues to point toward Higher steel prices over the next 30 days and perhaps much longer than that.

Higher scrap prices, especially if they come in at the upper end of the range being mentioned by our scrap sources ($40-$50/GT), will keep pressure on the domestic mills to raise prices again in early April for the 5th time since early December 2015. We heard from one steel buyer this afternoon, “Yikes, heard another round of price increases coming next week.” Next week may be a bit early but we would not be surprised to see price announcements during the first week of April.