Service Centers Reach "Capitulation" and Begin to Support Higher Prices

Flat rolled steel prices are on the way up following two recent rounds of price increases. Steel Market Update has been anticipating the turnaround in prices as the market has been near the point of “capitulation” for several weeks. Capitulation is the point when 75 percent or more of our service center survey respondents are reporting their company as lowering spot pricing to their end customers compared to what they were doing just two weeks prior. The stress on inventory values and margins puts distributors at a psychological point where they will support price increase announcements when made by the domestic steel mills. What we are seeing, having reached the point of capitulation over the past six weeks, steel mills raised prices and now the service centers are beginning to support higher prices. However, our data does not suggest full support – yet….

The data shown in the graphics below come from last week’s SMU Flat Rolled and Plate Steel Market Trends survey. We invited 460 steel people to provide their insights into the flat rolled and plate steel markets, and what factors are influencing steel prices, demand, supply, etc.