Steel Products
Final Thoughts
Written by John Packard
March 13, 2013
Our SMU Price Momentum Indicator continues to be at Neutral and has been for 14 weeks. We do not yet see enough momentum to cause prices to rise or fall quickly. The market appears to be in a slightly over-supplied basis and demand – at the moment – is flat. Not dead by any means, but many service centers are noting that some customers are doing OK while others appear to be struggling a bit.
Inventories appear to be balanced to slightly higher than needed. Our survey from last week found both service centers and manufacturing companies as reporting their buying patterns as “maintaining” existing inventory levels (manufacturers = 72 percent, service centers = 62 percent) or reducing inventories (manufacturers = 25 percent, service centers = 33 percent). These results are consistent with what we found during the middle of February. We do not believe there will be any rush by either service centers or manufacturing companies to book out orders.
One service center executive told us late this afternoon that he believes the bottom of this cycle will only last three weeks – about the length of HR lead times. He surmised that within three weeks the mills will need orders.
Many buyers told us over the past two days that the increase in scrap prices for March are not enough to move prices much higher from here. The expectation by many of the steel buyers with whom we spoke is that April scrap prices will ease. They also pointed to the international markets where iron ore prices have dropped.
We continue to take a neutral position as there are some maintenance outages planned and maybe some capacity might be removed from the marketplace if orders don’t flow as expected over the next few weeks. We also have negotiations at USS Lake Erie works in Canada on a contract which expires in the middle of April. USS has stated they expect the contract to be settled.
Your comments are welcome – you can send them to me at John@SteelMarketUpdate.com
As always your business is truly appreciated.
John Packard
Read more from John PackardLatest in Steel Products
Market says cutting interest rates will spur stalled domestic plate demand
Market sources say demand for domestic plate refuses to budge despite stagnating prices.
U.S. Steel to halt slab conversion at Granite City Works
U.S. Steel said it plans to reduce slab consumption at its Granite City Works near St. Louis, a company spokesperson said on Monday. The Pittsburgh-based steelmaker will shift the production and processing of steel slabs to its Mon Valley Works near Pittsburgh and its Gary Works near Chicago. Citing a United Steelworkers (USW) union memo, […]
SMU Week in Review: September 1-5
Here are highlights of what’s happened this past week and a few upcoming things to keep an eye on.
HR Futures: Market finds footing on supply-side mechanics
As Labor Day marks the transition into fall, the steel market enters September with a similar sense of change. Supply-side fundamentals are beginning to show signs of restraint: imports are limited, outages loom, and production is capped, setting the stage for a market that feels steady on the surface but still unsettled underneath.
Beige Book: US markets remain cautious amidst volatile pricing environment
Sluggish economic activity across the US was largely attributed to uncertainty caused by tariff policies and growing cost pressures, according to the US Federal Reserve’s (The Fed) latest Beige Book report. The Fed’s latest economic report, posted on Sept. 3, consists of economic findings from the six weeks preceding Aug. 25 throughout 12 districts. Economic […]