Steel prices are falling fast—so fast that we hesitate to put numbers to paper for fear they’ll be old by the time the ink dries.
Why are we almost certain prices will continue to drop? Lead times lead steel prices on the way up and on the way down. (Recall that lead times are the time between when an order is placed at a mill and when that order is processed.) That’s why Steel Market Update (SMU) keeps just as close an eye on lead times as on prices.
And prices have a lot of catching up to do on the downside, if Figure 1 is any indication. As of Dec. 7, SMU’s average hot-rolled coil (HRC) price was $1,730/ton ($86.50/cwt). That’s down about 7% from $1,855/ton last month and down nearly 12% from a 2020 peak of $1,955/ton in early September.
Talk of gradual declines began just weeks ago. That’s not the case anymore. And in any other cycle, a decline of $225/ton in just a few months would have been catastrophic. But it shouldn’t have caught you by surprise if you were paying attention to lead times.
Hot-rolled lead times now average about five weeks, down from an average of approximately seven weeks in November—and a far cry from the 10 to 11 weeks over the summer. Actually, we’ve seen published hot-rolled lead times from some mills as short as three to four weeks—or about 67% lower than the peak.
