Final Thoughts

Final Thoughts

Written by John Packard


Our ferrous scrap sources told us that Detroit scrap prices were settled earlier today where all of the prices were reported as being sideways (no change from June pricing) with the exception of shredded scrap which was reported as being down $10 to three mills, sideways to another and one mill being undecided. We will have much more on ferrous scrap prices on Thursday as negotiations come to a final resolution.

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Our first keynote speaker will be Dr. Chris Kuehl of Armada Corporate Intelligence. Here is something that they wrote in this evening’s report, “We wrote months ago about the plummeting of iron ore and steel in China and thought at the time that it might be an early indicator of problems mounting in the country at a street level. We also wrote about some small bankruptcies that had started where (for the first time in years); the Chinese Central Bank was not stepping in to bail those companies out. They were letting them go under. The Chinese manufacturing sector has been in contraction for most of 2015 and the Baltic Dry Index hit an all-time low this spring.  The evidence was there, if we were willing to pay attention to it. The fact that Chinese manufacturing and output is weak during a time when the US dollar is very strong (which would make acquisition of products from China very cheap), should concern us even further. Something at a fundamental, market level is very wrong in the country.” The world is a crazy place and it does impact the U.S. markets – including the steel industry and end user markets.

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John Packard, Publisher

 

Latest in Final Thoughts

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.

Final thoughts

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?