Tag Archives: prices
An index compiled by Management Science Associates (MSA) shows significant price increases in August for two of the three grades it tracks.
On average, MSA’s RMDAS (Raw Material Data Aggregation Service) shows prices changing from July(on a delivered-mill basis) by as little as a $3/long ton decrease, to as much as a $28/l.t increase.
Should you cut your prices to increase sales during a recession?
Let’s Check the Math
FACT:: If you cut prices by 20%, you have to sell 25% more units just to maintain revenue(break even).
During good times, a 25% increase in sales volume is asking a lot. In a recession, the math says it’s self induced suicide for almost all who try.
Over the past week, the Chinese scrap market saw a slight rising trend, with a further ascension expected in the coming period against the tight availability of scrap supply. However, the relatively soft performance lately observed in the finished steel market is likely to exert a significant impact on the scrap market
Source: SteelOrbis Shanghai – For the latest in steel news & trends subscribe to SteelOrbis News at http://www.steelorbis.com
With US shredded scrap prices dropping by up to $30/long ton this month, there is a very good chance that US rebar prices will fall right along with them.
Given the ongoing weak demand in the US rebar market, it is quite likely that this time, domestic mills may opt to lower rebar prices in step with the decreases in scrap.
eanwhile, Turkish mills are still pretty hungry for business and they are seeing falling scrap costs as well. However, if US prices do come down another notch as expected, Mexican rebar imports, along with imports from other sources, will most likely come down by at least as much in order to stay competitive with US material. Source: SteelOrbis – - For the latest in steel news & trends subscribe to SteelOrbis News at http://www.steelorbis.com
Steel buyers aren’t showing much enthusiasm for early 2009, according to a poll by Purchasing magazine, since incoming customer orders are down, manufacturing operations are depressed and prices on all raw materials have been collapsing. Though more optimistic than in November, buyers are entering the New Year with little enthusiasm about first-quarter demand or flat-rolled product–even with expectations of lower transaction prices than the December averages of $634 for hot-rolled sheet, $736 for cold-rolled sheet and $757 for hot-dip galvanized.
Reason: “The U.S. economy remains firmly locked in a deep recession that will be difficult to emerge from in the months ahead,” which will keep steel demand depressed, says Scott Anderson, the senior economist at Wells Fargo Economics in Minneapolis. “Consumer confidence is getting totally swamped by a rapidly deteriorating labor market and plunging housing and stock market wealth,” which will keep sales of steel-bearing products depressed.
Analyst John Anton at IHS Global Insight’s offices in Washington says that “fear has descended onto the steel market, with prices seizing for many products.” He believes the demand side is weak in preparation of a long recession and that has been stronger than the fourth quarter supply-side reduction in production to less than 50% of capacity.
Mills have cut production but buyers have reduced purchasing more
“There is some credence to the fears on the demand side,” says Anton, noting that “the downturn will be severe and there will be little recovery in North American sheet end-markets of housing, appliances and automotive, which are at the lowest levels in decades.” Anton says this end-use weakness will persist through 2009.
In December, the purchase price average for benchmark hot-rolled sheet in coil was 47% below the cyclical peak of $1,068 in July while cold-rolled sheet in coil dropped by 42%. And there was December price slippage also evident for coated sheet, plate products, rods, light structurals and most bar grades. Stainless steel prices also dipped at year’s end. And the slide isn’t over yet.
In fact, according to sheet steel buyers polled in December, early delivered prices for January averaged $525 for hot-rolled and $628 for cold-rolled. The survey also shows that only 16% of the steel buyers plan to increase purchasing even at reduced prices, though that’s higher than the 12% reporting plans to increase buying in November. “There aren’t that many orders out there, especially at this time of year,” a Midwest service center source tells the American Metal Market subscription newspaper. “The holidays are always slow, but with everything that has happened (related to the global credit crisis), things are even slower.”
Source: Tom Stundza- Purchasing.com
US mill margins ‘historically huge’ as scrap prices languish
Dramatic falls in US scrap prices but continuing high operating margins amongst steelmakers have defused the assertion made just few months ago by the American Scrap Coalition that high US steel prices were caused by high US scrap prices, Blake Kelley of Sims Metal Management told the Bureau of International Recycling (BIR) convention in Düsseldorf last week.
Kelley drew attention to how currently published rolled steel prices of many US mills, and much reduced scrap prices “still allow historically huge operating margins,” citing one published example of a $660/gross ton difference between a just reduced rebar price and scrap purchase costs. He noted that such a margin “presupposes that the true steel sale price is as published, and also suggests any earlier made unfilled scrap purchase contracts were cancelled.”
Courtesy: Steel Business Briefing