This Week's Emails

“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?

John, I could not agree more. We have not had a single mill budge. Their message is pretty clear today that they have no desire to move pricing lower – especially considering the scheduled Q4 outages combined with the unforeseen Q3 issues the mills are still rectifying. My bet would be that we see an additional increase of $20-$25 in the next few weeks. Hopefully the conversion mills have indeed been paying higher costs for slab/substrate and they have no other alternative but to raise (or at least maintain) the current numbers. We continue to hear the cries on the street that demand is weak, especially in the construction sector, and a fall back is eminent. However, as we said last month, if you only pay attention to the demand component of the equation you are only seeing half of the picture.”

From a trading company which deals in OCTG we received the following comments prior to the U.S. ITC decision on going forward with the OCTG trade cases:

“The ITC hardly ever throws out any cases / countries at this stage, so this should have been no surprise to anybody, with no impact on the market.

The AIIS statement is self-serving. When you look at the import numbers over the last 3 years, the exporters have NOT behaved responsibly, especially the Koreans. The Koreans seem convinced that even if found guilty, they will end up with low dumping duties, whatever that is. I think they are in denial.”

From a Midwest service center executive regarding pricing and demand:

“We have not seen much change in mill spot market pricing this week so things seem to be firm/steady. What we have noticed is that many brokers and other warehouses have decided to move inventory that has been on their lists for three or more weeks at lower numbers then when they were originally posted. The hubbub of prices going higher has waned and we are back to moving all this inventory that is in the pipeline with no increase in demand.

Typically this is the first sign of purchase pricing to decline for us, but we are not getting any signs from the mills in regard to prices going anywhere but up. Since they started this run we have yet to find just cause for it. Demand is steady but on the lower side of last year following several months of missed projections. Raw material pricing seems to be declining all around and with AK and Thyssen coming back there is no major change in lead times anywhere to signify price increases. Truthfully we are a bit baffled that this price increase has taken shape at all.

The only good news we have heard from our customers is that most of them are planning on 2014 being a modestly better year and are waiting to see what happens with Obamacare and any other tax/regulation burdens may be put into place to further slowdown or stop this “recovery.”

Personally I appreciate any good news right now even if I’m not sure I agree with it or not.”

SMU appreciates any and all comments from our readers. You are welcome to send them to us at: Info@SteelMarketUpdate.com or John@SteelMarketUpdate.com.