Steel Market Update Explains Difference Between Neutral and Higher Steel Price Momentum
Late last week, Steel Market Update entertained comments from one of the integrated steel mills who questioned our “Neutral” rating through the end of August even though flat rolled steel prices had increased by approximately $20 per ton from the beginning to the end of the month.
Our response is the “Neutral” designation is a warning of change to both buyers and sellers of flat rolled steel in North America. One of the goals of Steel Market Update is to provide an early warning system to the industry as markets transition. At the same time, SMU understands it is not our position to actually “push” prices in one direction or another. We want to allow the buyers and sellers to determine market prices based on the merits of the market. Steel Market Update understood the need for the domestic mills to receive higher steel prices due to cost factors the steel mills had to contend with. At the same time with an over-capacity of flat rolled production in the United States and Canada this created (and continues to create) an issue which needs to be negotiated between the two parties – buyers and sellers.
At the moment it appears – at least in our opinion – the desire to collect higher prices is trumping the over-supply situation. At this moment. Longer term, as mill lead times reach into the late November and December time frame, we expect the traditional late 4th Quarter slump to occur as the U.S. and Canadian mills struggle with their order books.
Steel Market Update is conducting one of our bi-monthly steel market surveys right now. On Tuesday we will begin to publish the results of our survey in our Steel Market Update newsletter. For those not familiar with our newsletter – we publish three times per week (excluding U.S. holidays such as Labor Day) on Sunday, Tuesday and Wednesday evenings. The newsletter covers flat rolled steel industry issues, news and important events. We also produce price ranges and indexes for hot rolled, cold rolled, galvanized and Galvalume coils as well as #1 HMS, Shredded and #1 busheling scrap.
We offer free trials to our newsletter which you can register for on our website: www.steelmarketupdate.com or by clicking on the button below.
Steel Market Update also conducts various steel industry educational workshops and conferences. Our next workshop will be on September 29, 2011 and is our Hedging Price Risk workshop which will be held in Chicago. Our large annual conference is held in conjunction with METALCON on October 10, 2011 in Atlanta, GA. You can find out more about our workshops and conferences on our website in the Events section: www.steelmarketupdate.com/events