This will be a busy week – at least the beginning of the week. We have the US Department of Commerce scheduled to release Preliminary Determinations on Heavy Walled Rectangular Welded Carbon Pipes and Tubes from Turkey on Monday. On Tuesday (vote will be on Monday) the US DOC is scheduled to release antidumping (AD) Preliminary Determinations on corrosion resistant steels (galvanized/Galvalume). The CORE announcement will be a critical one for the domestic steel industry and will most likely clear a path (provide a road map) for the cold rolled and hot rolled AD determinations to follow. Our expectation is for China to be hit hard while other countries will be not so much (or none at all).
This is also the week of Christmas and at the end of next week is New Year’s Eve. Both of these events will impact our publishing schedule. We will publish again on Tuesday, December 22nd and then we will not publish another Executive level issue until the following Tuesday, December 29th unless something happens that needs to be covered and brought to the attention of our customers. We will not publish on Thursday, December 31, 2015 and will have a limited issue on the following Sunday (end of month data), January 3, 2016.
A reminder, we have a few spots open for our next Steel 101 workshop which will be held in Starkville, Mississippi and will include a tour of the SDI Columbus steel mill. The dates for the workshop are January 19-20, 2016. You can find details on our website or you are welcome to contact our office: 800-432-3475.
If you are planning on taking an extended holiday over the next week or two, please enjoy your friends and family and be safe. We are looking forward to seeing you again in the New Year.
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
What are some “Black Swans” to watch out for? With the war in Ukraine entering its third year, your mind might understandably move to conflicts overseas. Here is one closer to home to consider: US trade relations with Mexico taking a turn for the worse. I mention that because the Office of the United States Trade Representative (USTR) dropped a (virtual) bombshell earlier this month.
Domestic prices have been sliding since the beginning of the year, and I don’t see any obvious reasons why the slide might stop this week. But let’s put the timing of a bottom aside for a minute. The question among some of you seems to be whether we’ll see another price spike, or at least a “dead-cat bounce,” before the typical summer doldrums kick in.
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.