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First quarter 2017 report on steel market

Editor’s note: Snips is partnering with Cleveland-based distributor Majestic Steel USA, which supplies flat-rolled steel to HVAC and mechanical contractors, to bring you this occasional column.

In recent years, the steel market has become increasingly volatile, causing fierce and frequent movements in the price HVAC and mechanical contractors pay for sheet metal.

Among the factors impacting the market:

As a result of zinc prices growing in the first quarter of 2017, domestic mills increased galvanized coating costs twice during the quarter.
Base prices at domestic steel mills also increased, impacted by iron ore and scrap, with both hitting multiyear pricing highs.
Continued domestic mill outages and idling have contributed to lower production levels.
Recent trade laws have greatly reduced the amount of imported, coated sheet metal from 2015 highs.
Service center inventories remained lean throughout the quarter, as there was cautious buying at new price levels.
The combination of increased raw material costs, decreased production/imports and low service center inventories helped push finished steel pricing to six-year highs during the first quarter of the year.

We expect the market dynamics that transpired at the mill level during the first quarter to have a continued impact on the cost environment for HVAC and mechanical contractors heading into the second quarter. With the cost to coat galvanized steel on the rise, lighter gauge material — a necessity in the manufacturing of ductwork — may be subject to the greatest increases hitting the market.

More information is available in the “Core Report,” Majestic Steel USA’s market research sheet, which the company says provides unbiased insight on key economic indicators for the sheet metal industry, condensed into an easy-to-read email newsletter. Majestic Steel says it tracks more than 500 steel-related indicators to bring readers a clear, condensed view of the steel market.