On Thursday evening I attended an Association of Steel Distributors (ASD) regional meeting in Chicago. Although the program had been set a couple of months ago, the timing was spot on as they had Larry Friedman, trade attorney with Barnes, Richardson & Colburn, LLP. He did an excellent job of positioning where the idea of trade laws came from, what has to be proven in order to win a trade case and why the five countries named in the latest coated trade case were selected. I am getting his Power Point slides and we will produce an article on the subject in Sunday night’s issue.
What was interesting was there were a couple of questions regarding the TPP and TPA legislation and we happen to have an article on the exact subject in tonight’s issue. So, I guess we are leaning in the right direction with our reporting (thank you Sandy).
Our Steel Summit workshop is getting a lot of buzz during our time here in Chicago. Everyone is excited with the program we have put together and we are in the process of adding a couple of the final pieces to the puzzle which we will get out to everyone soon. This will be an excellent networking event based on the companies who have registered so far. We have last year’s attending companies on our website and we are finding that we are getting support from those who attended last year, many of them increasing the number of people who will be attending from their company. We are also seeing new companies have found us or learned about our conference. This is one that will be worth the money. There will be some surprises as we work to make this not only a networking, information gathering, forecasting conference but to make it an “Event” in the true sense of the word. There is nothing worse than good subjects with boring or self-serving speakers. It is also important to have a laugh or two as this business can be so serious at times. Come to Atlanta on September 1st and 2nd to see what we (and everyone else) is talking about. Details are on the website or you can click here.
Tonight’s issue is running a little later than usual due to my travels and meetings. The ASD did a great job tonight as did Bank of America Merrill Lynch last night where I spoke.
As always your business is truly appreciated by all of us at Steel Market Update.
John Packard, Publisher
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I’ve had discussions with some of you lately about where and when sheet prices might bottom. Some of you say that hot-rolled (HR) coil prices won’t fall below $800 per short ton (st). Others tell me that bigger buyers aren’t interested unless they can get something that starts with a six. Obviously a lot depends on whether we're talking 50 tons or 50,000 tons. I've even gotten some guff about how the drop in US prices is happening only because we’re talking about it happening.
We’ve all heard a lot about mill “discipline” following a wave of consolidation over the last few years. That discipline is often evident when prices are rising, less so when they are falling. I remember hearing earlier this year that mills weren’t going to let hot-rolled (HR) coil prices fall below $1,000 per short ton (st). Then not below $900/st. Now, some of you tell me that HR prices in the mid/high-$800s are the “1-800 price” – widely available to regular spot buyers. So what comes next, and will mills “hold the line” in the $800s?
Everyone knows the old saying that “a picture is worth a thousand words.” Just because it’s a cliché doesn’t mean that it’s wrong. A lot of inked has been spilled trying to figure out why prices are falling now. I thought it might be as simple as this: Market dynamics in the fourth quarter (UAW strike, companies buying ahead of an anticipated post-strike price spike, etc.) pulled forward restocking activity that typically happens in the first quarter.
What a difference a month makes. There are a few full bulls left in the room, but their numbers are dwindling. We’ll release results of our full steel market survey tomorrow afternoon. I took a sneak peak at the data on Thursday. And more people than I expected think that US hot-rolled (HR) coil prices will be in the $700s per short ton (st) two months from now. Vanishingly few think prices will be above $1,000/st in mid-April.
Sheet prices have fallen again this week on shorter lead times, higher imports, and potentially higher inventories. (We’ll see for sure when we release our service center shipment and inventory data next week.) I remember reporting almost exactly the same thing about a month ago and getting a fair amount of pushback. Not so much these days.