Final Thoughts

Final Thoughts

Written by John Packard

On Friday the Wall Street Journal wrote an article about the AK Steel price increase announcement and Steel Market Update was quoted in the article. The article was picked up by the Dow Jones and NASDAQ news feeds. Here is a copy of the article for those who may be interested.

I have been an optimist for a number of months. The reason being our surveys have been consistently showing improving (more optimistic) Sentiment within buyers and sellers of steel. Our surveys are also indicating an improving demand scenario and inventories seem to be getting back in line.

I am not the only one who thinks fears of recession are overblown. Here is a note from Keith Prather of Armada Corporate Intelligence (Chris Kuehl’s partner). This is what Keith had to say the other day, “I just don’t understand, and I’m a Little Angry. Let’s be clear, this is Keith, not Chris (he might disagree with me!). I needed to throw an editorial out here today because of headlines and commentary I’m hearing about a recession. Those of you who know me know that I’m not always an optimist – I’m more of a data-driven realist that can come across as a pessimist. I like to see the evidence in the data and make conclusions and predictions from that data. So, I get headlines today about the Services sector “collapse” in February and that it will show us as being in recession in the first quarter, etc. And this comes from prominent sources! It just isn’t true (picture me saying that with a whiny, tired, frustrated little voice).”

Dr. Chris Kuehl (one of our Steel Summit speakers from 2014 & 2015) provided his insights as well, “I do indeed agree wholeheartedly with his assessment of the economy and the assertion that we are not heading towards a recession anytime in the foreseeable future. Apparently we are in good company as most of the economists polled this week assert the economy is still growing albeit at a slow and frustrating pace. The latest job numbers confirm what many had believed earlier – the economy is still in steady growth mode – it is just that the pace of that growth is excruciatingly slow. Since the start of the year there has been great angst in the markets provoked by a few sectors that have been in real trouble. The oil sector has been in big trouble for over a year now and that pain doesn’t appear to be easing any time soon. The Chinese slowdown has caused a great deal of concern as well and these combined to scare the wits out of the investment community. The fact is that neither of these areas of concern have been quite as bad as painted.”

I got a note this evening from a friend who just landed in China. He told me prices in China have begun to move, “Q235 Billet in Tangshan hiked to 2,020 yuan/ton (311 dollars/ton) by the end of Sunday March 06, surging 240 yuan/ton (37 dollars/ton) during March 05-06 and having increased by approximately 500 yuan/ton (77 dollars/ton) since February 14, the Chinese return from Lunar New Year Holiday. There’s a strong bullish sentiment about more rises ahead.” 

I will end my comments this evening by encouraging our readers to remain aware of what is going on around you and around the world. Prices may surprise to the upside before all is said and done…

Your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher

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Unless you've been under a rock, you know by know that Nucor's published HR price for this week is $760 per short ton, down $65/st from the company’s $825/st a week ago. I could use more colorful words. But I think it’s safe to say that most of the market was not expecting this. For starters, US sheet mills never announce price decreases. (OK, not never. It has come to my attention that Severstal North America rescinded a price increase back on Feb. 14, 2012. And it caused quite the ruckus.)