Final Thoughts

Final Thoughts

Written by John Packard

January 6, 2016

I was speaking with a large service center which buys mostly hot rolled this afternoon. We were discussing what each of our opinions were regarding the direction of pricing and how 1st quarter will ultimately come out. In the process this executive (who buy the way will be attending our Leadership Summit Conference) told us there business, although not setting any records was a bit better than expected in December. We heard from a second service center executive who told me earlier this week that their company had a surge of orders/shipments during the last two weeks of December which resulted in their month being up by something like 20 percent. This was totally unexpected.

So, my opinion is that I am optimistic about the industry and I was very pleased to see the 3 month moving average (3MMA) break the downward cycle and move higher for the first time in many months (see Sentiment article).

It is also nice to see a graphic visual of both lead times and negotiations which are suggesting the worst is behind us.

The next data set that I am waiting for is the MSCI inventories and our analysis of the “Apparent Excess/Deficit” in flat rolled inventories at the service centers. We are forecasting a drop in inventories although we think it will still be March before they will be at levels where buyers “have to” buy.

Of course, everyone has to remember where lead times are. The first service center executive mentioned above told me today that they were seeing spot HRC lead times out into March at some of the northern mills. I was also told that AM mentioned the word “prioritizing” when discussing orders and when they would be produced. We were told USS has already moved the Granite City orders to another facility.

The face of the market is changing which leads me to be optimistic.

I would like to hear from your company. How are you finding the market and what is the tone and direction of the discussions you are having with both your mill and service center suppliers? You can communicate with me directly at: John@SteelMarketUpdate.com

As always your business is truly appreciated by all of us here at Steel Market Update. Come join us in Palm Beach Gardens, Florida for our Leadership Summit Conference!

John Packard, Publisher

John Packard

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