Chinese Prices Dropping, U.S. Steel Buyers Sentiment Turning Negative

Steel buyers can be fickle people. They are tasked with keeping their company in product, and that those purchases be competitively priced at the time they are used. This is a daunting task when markets ebb and flow, and even more difficult when the government decides to become a major player in determining who will be the winners and losers.

The events of the past four or five weeks have compounded the issues facing steel buyers. Nucor announced $40 per ton price increases on flat rolled. The increase was not supported by all the domestic steel mills with at least one mill SMU spoke with saying the announcement was premature. Based on our pricing index, flat rolled steel prices continued their slide through this past week. The increase has not stuck. We continue to see lower spot prices on hot rolled, cold rolled, galvanized and Galvalume steels. Over the next 30 days, our Price Momentum Indicator is pointing lower meaning we believe prices will continue to slide. A steel buyer also must take into consideration what is happening around the world and how steel prices elsewhere may impact their buying decisions here, and international steel prices are under pressure.