2023 could bring restocking of inventory, higher steel prices

Steel sheet prices have bottomed or soon will, according to most respondents to our latest Steel Market Update (SMU) surveys. We’ve also seen more people predicting higher prices in the months ahead.

On a basic level, that’s because we’ve seen a modest increase in lead times—which are up by an average of 0.5 weeks recently. Hot-rolled coil (HRC) lead times, for example, had been slightly below four weeks on average; they’re now at 4.4 weeks (see Figure 1).

Lead times can be an important advance indicator of pricing moves. A 4.4-week lead time doesn’t mean higher prices are a slam dunk, but the chances of prices increasing go up considerably if we start to see HRC lead times averaging five to six weeks.

Also, mills are less willing to negotiate lower prices than they had been in prior weeks. Recall that for several months, nearly all producers were willing to discount to bring in orders.