Final Thoughts

February 16, 2015

OK, I have been asked for my opinion as to what I think will happen to steel prices from this point. I have a sense that we may be entering a period of transition. A point where the price spreads between foreign and domestic are “reasonable” and the domestic steel industry can re-capture some of their lost market share. I heard a couple of traders complaining at the Port of Tampa Steel Conference that they were spending more time trying to keep the orders they had on the books from being cancelled than they were taking new orders.

I was disappointed that the US Department of Commerce did not update the import licensing data as they normally do on Tuesday evenings. I expect it will be updated prior to our Thursday edition of SMU. I am curious to see if the license request flow remains consistent with what we saw in January or if we might see a bit of a pull back. Everyone is waiting for the pull back as it is needed in order to reduce and balance service center inventories.

There is continued pressure on scrap prices as we move through February and into March. I am not a forecaster of scrap pricing but, if the selling numbers erode further, then we might see more pressure on HRC pricing. But, if the foreign numbers remain at, or above the $460-$480 mark, the domestic mills – at least the mini-mills – will have the ability to maintain or even recoup some market share, even at the $500+ numbers.

That is my opinion – I wouldn’t necessarily take it to your bank to borrow money….

The MSCI inventory and shipment data is due out tomorrow (Wednesday) and we will have a detailed analysis for both our Premium and Executive level readers. Premium will receive our service center inventory Apparent Excess/Deficit report. Previously, we have been forecasting a large excess of flat rolled at the domestic distributors.

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