-The expected second round of price increases began on Friday.  This time it was ArcelorMittal leading the charge. Me too announcements should follow within days from other mills.  It is noteworthy that ArcelorMittal has little spot Hot Roll to sell  – it is usually the last mill to chase spot business. 

-The spot “ask” price will rise to $720, while the mills cross their fingers, grit their teeth, and hope to push the widespread transactional spot price of $700. Demand has been subdued, shrinking mill lead times and dampening indices such as the March Chicago PMI.  However, the market is very well supplied and markets around the world are stable and reasonably close to USA prices. We expect that bids will remain in the $680 range, as for most mills facing a weak Hot Roll order book; $680 represents a transaction price where they can make good money.     

-Reaction to this second round of price hikes by the buying community will be cynical and we expect buyers to continue to buy as needed and not react with hedge buying.   

-Initial price increases did little to flush out spring orders.  After a week, it was clear that order books were softening.  Supply discipline was seemingly the only barrier to a slide toward the low $600’s.  Temporarily, nothing sets mill resolve like a fresh industry wide price announcement – until, that is, they face not booking their assets.