Firm “Cycle” Bottom, More Price Increases to Come; SMU Momentum?

The domestic steel mills have been able to put a floor on flat rolled steel prices since Nucor announced their $40 per ton price increase on Jan. 28, 2019. Now that they have a firm floor, the mills are slowly moving prices higher. In the process, they are very slowly shifting momentum. Steel Market Update is of the opinion over the near term (next 30 to 60 days) that flat rolled steel prices will move sideways to slightly higher off the recent cyclical low.

We are not of the opinion that flat rolled prices will quickly move higher from here. However, from a risk standpoint, the chances of prices dropping $20-$40 per ton over the next 30 days are much lower than prices moving higher by the same amount. We anticipate a new price announcement, which many steel buyers believe is imminent (some believing it could come within the next 24 hours).