Steel Products
Final Thoughts
Written by John Packard
August 13, 2013
As I mentioned above in the first article I am getting pressure to adjust our Price Momentum from Higher to Neutral.I am not willing to do that – yet – and the main reason is we are in a supply driven pricing cycle and the supply issues have not yet been fully resolved.Does this mean prices will rocket higher from here? Probably not, but we need to resolve some issues first before we can pound the nails in this cycle’s coffin.
Steel mills, as public companies, tend to be tight lipped about their production issues. Bad press is not good for their investors nor is it good news for their customers.
With limited information assumptions are made. For example, ThyssenKrupp Steel Americas which includes the Alabama rolling mills as well as the CSA slab facility in Brazil suffered the loss of one of their blast furnaces (#2) in May. The furnace has returned to operation but it was not until the ThyssenKrupp AG earnings conference call today that we learned the furnace is still not at optimal operation and is producing approximately 5,000 metric tons per day. This may mean (assumption) that TK USA may take a little longer than thought to return to full slab inventories. Our original expectation was the mill would be back to full inventories by the end of this month.
SMU also learned this evening that ArcelorMittal Indiana Harbor lost their #3 blast furnace over the weekend due to the failure of a blower. The furnace is forecast to be down one week and the projected tonnage loss is 125,000 tons.
The other thing I watch carefully is the way steel mills are negotiating with their customers. At this point in time buyers seem to be a little more frustrated than their steel mill counterparts.
I think the mills still have some momentum behind them. The bet is the first sign of weakness will come out of the conversion mills whose business tends to be construction related and more exposed to the spot markets. At the moment, there are early signs that they need orders. The question is will they move the pricing arrow in order to bolster their order books?
Another subject: Steel 101 – we currently have four spots left before the workshop will be completely sold out. Information can be found on our website: www.SteelMarketUpdate.com or by contacting our office at: 800-432-3475.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard
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