I will be in my office all week (yea!) this week. This is probably the first time I have spent a full week behind my desk in the last couple of months. If you have any questions for me this is a good week to track me down and ask away….
I would like to take a moment to thank Ira Kreft, Mary Blizzard and all of the good people at the Bank of America Merrill Lynch offices in Chicago for allowing me to speak to a number of their clients this past week.
I also want to thank the Association of Steel Distributors for hosting Ray Culley and myself at their Chicago regional meeting. I am quite certain that we will see a number of the ASD membership at our Steel Summit Conference in Atlanta on September 1st and 2nd.
We have a new writer who will be splitting the duties of writing about hot rolled coil (HRC) futures, busheling (BUS) futures and iron ore trading. We want to welcome Spencer Johnson who is a risk management consultant in ferrous and base metals with FC Stone, LLC. If you have any questions you would like Andre Marshall of Crunch Risk, LLC or Spencer Johnson to tackle, please send them to: info@SteelMarketUpdate.com.
Registration is open for our next Steel 101: Introduction to Steel Making & Market Fundamentals workshop which will be held in Davenport, Iowa and will include a tour of the SSAB mini-mill (EAF). Information is on our website or you are free to contact me in my office with any questions that you might have. Steel Market Update member companies receive special discounts on this (and all) workshop as well as our Steel Summit Conference. The dates on the Steel 101 workshop in Iowa are October 6-7, 2015.
If you are currently on a free trial to our newsletter and would like to learn more about becoming a member (subscriber) please feel free to contact me at 800-432-3475 or by email: John@SteelMarketUpdate.com. We very much would like to earn your business.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
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Latest in Final Thoughts
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.