Flat Rolled Price Momentum Continues to Point Toward Lower Prices (?)

We saw more erosion in hot rolled steel prices this week based on the responses we received from our data providers throughout the day today. Benchmark hot rolled dropped to an average of $835 per ton, while other flat rolled products saw mixed results. Cold rolled rose as the low-end numbers disappeared from last week. We saw galvanized and Galvalume both lower compared to one week ago. Our Price Momentum Indicator on flat rolled continues to point toward lower prices over the next 30 days. Having said that, we are picking up some signs of a bottom and that subject is being debated amongst the steel buyers we spoke with today.

A manufacturer reported to SMU today, “While we may be approaching a bottom, the futures market continues to be backwardated by $40 to $50 through Q1. That by itself suggests the market doesn’t believe we’ve gotten to the bottom. Domestic mills continue to appear hungry…what they’ll put in print and what they are saying in person are always two different things. They remain hungry and negotiable. Foreign offers are trying to hold a line and, realizing that they can’t, some have attempted to lose orders only to realize they should have listened. They are now listening. If the mills try pushing an increase, it will be to prop a floor under things and stop the fall. Perhaps they can use rising scrap prices as a lever.”