Service Center Spot Pricing: Has the "Pain" Begun?

Returns from Steel Market Update’s market trends questionnaire show a growing percentage of manufacturing companies reporting service center spot pricing on flat rolled products as being lower than what they saw at the beginning of November. Seventy-three percent of the manufacturing respondents reported seeing slipping spot prices this past week. This is an increase of 23 percentage points from the beginning of the month. Since late third quarter, the end users have been consistently reporting lower spot numbers out of their steel distribution suppliers.

Service centers agree with their manufacturing customers with 63 percent of the distributors reporting their company as lowering spot prices to their customers. This is an increase of 31 percent compared to our early November analysis. Our service center respondents have not been reporting prices as dropping as consistently (or deeply) as the manufacturers. When Nucor made their price announcement, there was a very weak attempt (see green bars at the beginning of Q4 in the graphic below) by a small group of distributors to move prices higher. That clearly failed based on the results of this past week.