Final Thoughts

April 10, 2015

During my conference call with Cowen & Company and their customers last week I mentioned that I thought we could see a domestic mill price increase by the middle of May. My reasoning is inventories should begin to drop at the service center level and many of the end users want to tie up steel at today’s prices. There was a rumor running around the industry early last week of at least one mill suggesting there could be an increase “soon.”

However, as the week wore on we heard that the one mill being suggested as leaning toward an increase had all of a sudden gone quiet. The speculation being bantered about is that now is not the right time to go for an increase when you are complaining about foreign imports and asking for the government to make changes to the dumping rules.

It is also being suggested that it would not be wise to announce a price increase just prior to Anti-Dumping (AD) and countervailing duty (CVD) duty suits being filed (many believe the filing will be done in May). The domestic mills announced 1st Quarter earnings over the next few weeks – look for hints of any suits in their press releases and on the conference calls with analysts.

Something else buyers and sellers of steel need to be concerned about as we move into 3rd Quarter: The USW contracts at US Steel and ArcelorMittal expire at midnight on August 31, 2015. If you remember the last contract negotiation go-around, ArcelorMittal took an aggressive stance to contain their costs. US Steel, on the other hand, settled relatively quickly. Now US Steel has a new CEO at the helm and the industry is weaker with the drop in commodity prices which don’t necessarily pass through to those companies who have their own mines.

I am expecting contentious negotiations between the USW and the two integrated steel mills over the summer. It’s too early to tell if there might be a lockout or strike at this point in time, but you do need to be aware of the positions each mill is taking once they become public. Last time ArcelorMittal had a website dedicated to their position. Last week AM launched a new blog called Raw Material – you may want to keep an eye on it.

The Boy Scout Dinner will be held in Chicago as always on the 14th of May. I hope to attend along with Ray Culley who is working with me on our Steel Summit Conference.

I will be back in the Chicago area the following week to assist in the instruction of our Steel 101: Introduction to Steel Making & Market Fundamentals workshop. The workshop will be held on the 19th and 20th of May in Merriville, Indiana and the workshop will include a tour of the NLMK Indiana mini-mill. Details can be found on our website.

As always your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher