Josh Spoores said an imbalance between market demand for steel and production levels at domestic and foreign mills is driving down steel pricing.

Speaking recently at the annual SteelOrbis steel trade conference in San Diego, Majestic Steel USA Rresearch manager Josh Spoores said an imbalance between market demand for steel and production levels at domestic and foreign mills is driving down steel pricing, a trend he expects will continue for several months.

 “Steel prices are facing heavy pressure and are experiencing a correction that we predicted a couple of months ago in the Spoores Report,” said Spoores. “Contrary to some reports, a lack of credit and liquidity in the market is not the genesis of price declines. Prices were being supported by the recovery and low inventories in the supply chain. But demand has softened and excess production is a major factor in the current price declines.”

“Demand levels masqueraded as sustainable and convinced many in the supply chain to build inventories,” Spoores said, noting he expects a “quick price correction before prices start to move back up again in September on forward orders.”

Spoores noted that steel prices had run up by 29 percent in the first few months of the year, before retreating by about 11 percent in recent weeks. Average lead times for filling orders dropped by two weeks to 5.5 weeks, reflecting inventories at mills and service centers.

This information and more data are available in the Spoores Report , which closely tracks steel industry trends.