Service Center Spot Pricing Sees Split Between Manufacturers & Distributors

We had a bit of a split regarding service center spot prices in the analysis we did of the flat rolled steel markets last week. Manufacturing companies overwhelmingly reported their steel service center suppliers as dropping flat rolled steel spot prices compared to what they were seeing just a couple of weeks ago. On the other hand, the steel distributors themselves reported spot price action as essentially unchanged from our previous analysis which, was done during the middle of September.

Why is this important? Steel Market Update has been tracking the movement of service center spot prices for many years. Over time, we were able to provide a correlation between the movement of distributor spot pricing and support for price increases out of the domestic steel mills. We found as service centers became more active in selling off inventories at lower prices than what was being done in previous weeks, there comes a point at which distributors are supportive of a change in price direction. This is normally accomplished through the introduction of price increase announcements out of the domestic steel mills.