Hot Rolled Futures- Here We Go Again…

Written by: Bradley Clark, Director of Steel Trading, Kataman Metals

Well it certainly is beginning to feel like déjà vu all over again. Last week’s price hike announcements come during the same last week of the month as they did the previous month. They came after the spot price was trending down and after deals were being cut below $600 per ton (seemingly a psychological level mill’s try to defend). They come at a time whereby they will filter into the market in time to support the 2nd CRU print of the month, the print contract business is priced off. They come at a time when end user demand is weak, the dollar is strengthening, global steel stocks are high, lead times are short and iron ore is reversing its upward trend. The saving grace for producers is that scrap is up this month, but how much of that is weather related supply constraint, mill willingness to pay a bit up for scrap to beat the drum of rising costs to help pass along their price hikes is yet to be seen. All in all it feels like we have seen this movie before. Until end user demand returns in a significant way the market feels like it is skating on thin ice.