Final Thoughts

Our futures contributor, Tim Stevenson of Metal Edge Partners, raises a good question in his column this week. With the mills moving steel prices higher, have buyers restocked enough to stay out of the market? “If so, service centers and end users can step away from spot buys and wait for prices to fall again. If, on the other hand, inventory levels are still too low, people may have no choice but to keep buying higher priced steel, providing more longevity to this upward price cycle.”

Steel Market Update’s latest market survey shows that 70 percent of service centers are comfortable with their inventory levels or are looking to reduce inventories. Only 30 percent say they are in a buying mode (see chart). We’ll be looking closely to see if those percentages change in next week’s survey. If not—if the escalating prices aren’t bringing more buyers in off the sidelines—that will say something about how long and how high prices may rise.