I wrote last month that steel prices had stalled and that a bevy of indicators were suggesting that a fall might be around the corner.

I was cautious then not to make too much of a couple of weeks of SMU survey data. There is no reason to be cautious any longer. The warning signals we saw in April are now entrenched trends.

Pick your indicator: steel prices, lead times, or mill negotiations. All point to lower prices in the weeks ahead.

Let’s start with lead times and prices (see Figure 1). The big news recently is that hot-rolled coil (HRC) prices fell significantly below $1,400/ton ($70/cwt). Our average HRC price dropped to $1,365/ton in early and mid-May, down $115/ton (7.8%) from a post-Russia-invasion-of-Ukraine peak of $1,480/ton in mid to late April. (You can chart pricing information yourself using Steel Market Update’s interactive pricing tool, which can be found here.)

Included in that decline was a $75/ton week-over-week decline on May 10—the biggest drop we’ve seen since a $90/ton plunge in early February. Recall that prices in February were in freefall before the invasion of Ukraine sent them sharply upward again.

You’ll notice a theme across the indicators we track. Prices were plunging at the start of the year. HRC prices fell from $1,600/ton on Jan. 1 to $1,000/ton on March 1—a decline of $600/ton, or 37.5%. They then shot up to $1,480/ton after Russia’s invasion.

In other words, Russia’s military incursion into Ukraine more or less reset the market to where it was on Jan. 1. The problem now? Lead times are moving back to their normal ranges: about four to five weeks for hot-rolled, and about six to eight weeks for cold-rolled and coated. But prices remain well above their usual levels.

If you were already paying attention to lead times, the big drop in prices we’ve seen in recent weeks shouldn’t have come as a huge shock. HRC lead times were at 3.84 weeks in mid-February. Russian forces invaded Ukraine on Feb. 24, and HRC lead times subsequently extended 52% to a mid-April peak of 5.84 weeks. HRC lead times have since fallen 17% to 4.84 weeks. (Other products have followed roughly the same trend.)

If lead times continue to move lower, further price declines are in store. If you don’t believe me, keep reading.

Let’s start with mill negotiations (see Figure 2). It was a buyer’s market until the outbreak of war in Ukraine. The war sparked a seller’s market through March and most of April, and now we’re back to a buyer’s market again.