Final Thoughts
January 25, 2022
Final Thoughts
Written by John Packard
For those of you who participate in our bi-weekly steel market analysis questionnaires, or if you are a Premium level member, the results from the last few weeks would suggest service centers are at a point where they will support new price increases by the domestic steel mills. We collect data from manufacturing companies and steel service centers regarding spot prices being offered into the market by the steel distributors. In the past, when 75% of the service centers reported lowering spot prices, we found they had reached a point we called “capitulation.” This meant the distributors were seeing their inventories being devalued at an alarming rate.
The rise in prices that we saw beginning in late 2020, which continued for the greater portion of 2021, was not normal, and we can expect spot numbers at service centers to reflect the overall market trend for some time to come. We will continue to closely watch this data and other data points we collect to determine at what point the pain of sliding prices reaches a threshold that can no longer be tolerated.
