Steel Market Update reviews steel prices in the North American market on a daily basis. Our indexes cover hot rolled, cold rolled, galvanized and Galvalume pricing in the U.S. and Canada. Since our readers tend to be steel buyers we take the responsibility of being accurate very seriously. Recently, one of the largest industry publications has been reporting price decreases and their indexes reference price levels which may/may not be available to buyers in North America.

SMU received the following email/letter from a reader late last week. I will make some comments about the content of the letter on the other side (below):

“Good morning John,

I'm sure you saw this article in [publication name removed] earlier in the week. I think it is an excellent example of what you have been discussing in your recent newsletters about responsibility for reporting accurate or at least sensible information - or not reporting anything at all. The "source" referenced here is pathetically out of touch with reality or is attempting to influence the thinking of readers. Apparently, it is having some effect toward the latter as just this morning I heard a steel trader reference this article in a positive way when I asked him what he thought about current market conditions. His answer was "well, you see what [publication name removed] said earlier in the week about the market falling off". So, this had stuck in his mind and was influencing his thinking even though he is a seasoned veteran.

Hopefully the "southeastern distributor" who made the comment to [the other publication] is wearing a red face today, along with the [other publication] reporter who printed it, considering the price increase announcements of the past couple of days.

Anyway, thank you for maintaining balance in reporting in a responsible way.” (Source: A manufacturing and metals company)

From Our Perspective

We speak to a great number of buyers and sellers of steel on a daily, weekly and monthly basis. Everyone has an opinion about the market and the reasons why they believe the pricing trend will continue or reverse direction – and how quickly it will happen. However, saying its so (wishing for change) is trumped by actual transaction prices, the amount of competition which exists in the market and the ability, the direction of steelmaking input costs and the will of the domestic steel mills to move in a singular direction.

A former boss of mine – who is one of the members of SMU as are all of my former bosses – told me when I started the Steel Market Update project as an ongoing business concern and not just a sales tool for my customers – not to try to predict the future. “Leave predictions to the analysts,” he told me. He told me to concentrate my energies on staying on what we call “the razor’s edge” – trying to stay in tune with what is happening in the now and then watch for the keys we have learned over the years as early indicators of strength or weakness and don’t get pushed off stride by singular comments or rogue deals taken out of context.

We will make mistakes. Every so often we get a little ahead of ourselves and have tried to predict exactly when prices would rise or fall (not listening to our former boss’ instructions). Usually the domestic mills hand us our head when we try to do that. It appears other publications may have similar issues – and then they play the numbers game – the number of times they got it right vs. being totally wrong. SMU can not afford to be totally wrong – we figure it is better to be “scooped” than to get something totally wrong which could hurt our readers who are mostly active buyers of steel.

SMU disagrees with the article written by the other publication last week forecasting lower prices and citing data to back up their story. Our data has not shown us the price decreases indicated by another data provider. Nor do we show prices on certain products to be anywhere near as low as others may show at this time (which can vary by product). We continue to see the trend for prices as moving higher over the short term – especially with scrap prices rising so dramatically this month, the coking coal settlement we mentioned above and the expectation iron ore benchmark prices will increase somewhere between 40%-80% (“cost push”) coupled with at least one, if not more, integrated steel mill having trouble delivering product on time. All of these factors point toward continued price increases.

This will change – however – and SMU is watching the early indicators and we will point them out to our readers so you can make your own decisions as to when to pull the trigger with your suppliers/customers.

You can learn more about steel prices, trends and market momentum by registering for a free 4-week trial to our newsletter and total access to our website. You can register online at www.steelmarketupdate.com