Prices Poised for Another Dead Cat Bounce?

As of mid-November, steel prices appear to be moving upward following price increases announced by the major flat rolled and plate mills. How high and for how long is the subject of much debate and speculation. The market is clearly split between those in a buying mode in anticipation of sustained higher prices and those in a wait-and-see mode expecting yet another dead cat bounce.

On two occasions earlier this year the mills raised prices only to see a soft lifeless bounce, collecting a small increase for a short time and then watching the price of steel resume its downward trajectory. This time, the flat rolled mills announced one $40 increase on Oct. 24-25, then followed up with a second $40 increase on Nov. 7. Plate mills announced their own $40 price hikes in about the same time frame. Their goal is to reverse the 15-month downtrend that has nearly cut the price of steel in half, with serious consequences for sales and profits at mills and distributors alike. The benchmark price for hot rolled plummeted from more than $900 per ton in the summer of 2018 to just $470 per ton in mid-October, according to Steel Market Update data.