Final Thoughts

Final Thoughts

Written by John Packard


Even though I personally believe steel prices will probably not go too much lower from here, we still have the SMU Price Momentum Indicator pointing toward lower pricing. We are looking for signs that the slide may be about over but, we continue to see weakness on hot rolled products.

We got a note from a Nucor Berkeley customer today telling us the Nucor  galvanized prices quoted this week were actually higher than they were previously. They sent us a lead time table produced by Nucor Berkeley which showed galvanized lead times as being out to the end of January and into February 2016.

We were told that non-corrosion resistant products were being priced competitively with the most recent quote having been lowered.

We are looking for more evidence pointing toward the mills beginning to draw a line in the sand or, beginning to re-evaluate their spot pricing as being too low for market conditions.

Ferrous scrap prices firming in December (they weakened in all markets except the east coast for November) may be another indication that steel prices may be bottoming soon. The expectation is for scrap prices to begin to firm due to weak flows of obsolete grades and tepid demand at the steel mills. Dealers may be willing to sit on scrap in December with the intention of collecting higher prices come January.

We will be carefully watching the MSCI data which will come out next week.  Any major reduction in flat rolled inventories would be seen as a positive sign for steel prices (SMU is not, however, expecting a major reduction in inventories during October).

A reminder that our Steel 101: Introduction to Steel Making & Market Fundamentals workshop in Starkville, Mississippi on January 19-20, 2016 is available for registration. You can find details about the program, instructors, hotel and the tour of SDI Columbus which is part of the program on our website. If you have any questions please do not hesitate to contact our office: 800-432-3475 or info@SteelMarketUpdate.com

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

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?