Final Thoughts

Final Thoughts
Written by John Packard
November 12, 2014
I was at the Cowen & Company Global Metals, Mining and Materials Conference in New York City earlier this week. I always find it interesting when meeting with members of the financial community as their questions and concerns can many times be much different than those of the steel community. The constant question was how could steel prices avoid gravity – with gravity being defined as the pull of iron ore and scrap prices lower.
Then the next question is how low can prices go?
My opinion has been that iron ore and scrap prices influence the psychology of the market but not necessarily prices from month to month (unless the mills are on a roll and prices are rising, for some reason at that point in time the increasing scrap prices mean a lot…).
The announced price increases have not taken hold. Mostly because a number of mills need orders. A give-a-way is when the president of a service center tells me that one of the steel mills that they do not do business with is all of a sudden calling looking for orders. Those of you who have taken our Steel 101: Introduction to Steel Making & Market Fundamentals know that one of the early signs of a weakening market is the steel sales person is calling looking for business (promising to be price competitive) as opposed to when markets are rising (and the sales person can’t be found anywhere).
Another sign is whether service centers are supporting higher prices. We capture this during the survey process. When prices are truly changing service centers will raise their spot prices. Right now we are hearing complaints about the lack of margins and the competitiveness of the service center industry.
So, how far can prices go from here…?
I am in Savannah at the AWMI International Conference for the balance of the week.
We will begin our next survey on Monday of next week.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher

John Packard
Read more from John PackardLatest in Final Thoughts

Final Thoughts
SMU uses ferrous scrap survey data to take AI out on a test drive.

Final Thoughts
Will a US-UK meeting next week prove a harbinger of tariff deals to come, or will it be just another case of having the rug pulled from under us?

Final Thoughts
When will we see prime scrap become scarce as the worldwide transition to EAF melting increases, especially for HRC production? It's a question I've been asked a lot.

Final Thoughts: The hidden cost of analysis paralysis in the age of uncertainty
With US economic indicators all over the map, it’s no wonder the steel market has experienced a whole lot of analysis paralysis this year.

Final Thoughts
A recurring theme in conversations with some of you and in the comments submitted in our surveys is concerns about demand and uncertainty around tariffs. Where does SMU’s latest opinion polling on President Trump’s tariffs stand? Let’s take a look at the numbers.