Final Thoughts

Final Thoughts
Written by John Packard
November 9, 2015
I am here in New York City participating in the Cowen & Company Global Metals and Mining Conference. Day one was dedicated to the steel industry and the various commodities (scrap, iron ore, metallurgical coal). I thought I would provide a snapshot into some of the comments made during the conference by various CEO’s.
Lourenco Goncalves, CEO of Cliffs Natural Resources told the group that the preliminary countervailing duty results on the CORE trade suit “was better than expected.” He pointed to the 1998 hot rolled case that he was involved in saw much lower preliminary duties than what were announced last week.
Jim Wainscott, CEO of AK Steel (about to become Chairman of the Board) said, “There is no doubt in my mind that prices could pop back to previous levels [earlier he referenced $650 per ton].” He backed off the initial enthusiasm when he went on to say, “We will return to normal levels, whatever that means.”
Gregg Mollins, CEO of Reliance Steel & Aluminum said the service centers apparently did not learn their lesson in 2009 when it came to inventories. He said when distributors have bad years it is almost always related to inventory levels. He told the group that Reliance managed their inventories, they don’t speculate and they were able to raise margins during 2015.
Mario Longhi, CEO of US Steel said that they are spending time with the ITC commissioners as they want to make sure they have an understanding of “injury” which previously had been taken totally out of context.
Jim Wainscott told the group, “You have to play hardball with China.”
The CEO’s pointed out that the prices outside of China are $20 to $30 per ton higher than when China is involved in exporting steel to that country.
On a personal front I was able to secure one of our keynote speakers for next year’s Steel Summit Conference… (August 30-31, 2016 in Atlanta).
As always your business is truly appreciated.
John Packard, Publisher

John Packard
Read more from John PackardLatest in Final Thoughts

Final Thoughts
Tariff-related noise aside, there is one basic factor keeping buyers on the sidelines. Despite recent declines, HR prices remain at historically high levels. And there is no obvious support to keep them there.

Final Thoughts
United Airlines raised eyebrows earlier this month when it provided two forecasts for 2025 – one assuming a relatively stable economy and another assuming a recession. The reason? Uncertainty around the impact of President Trump’s policy shocks on the broader economy. And it sometimes feels like we’re seeing a battle between those two narratives (stable vs recession) play out within in the pages of this newsletter.

Final Thoughts
Despite some scary headlines lately (especially about Trump potentially firing Fed Chair Jerome Powell) this is not October 2008 (financial crisis) or March 2020 (onset of the pandemic). But it sure seems like we’ve taken a relatively strong economy and poured a thick sauce of uncertainty over it.

Final Thoughts
I put some of our survey data through ChatGpt, with interesting results.

Final Thoughts
Nearly 50% of respondents to our latest survey thought hot-rolled coil prices have already peaked. And where will those prices be two months from now? Responses were decidedly split on that question.