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
“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.