Final Thoughts

Final Thoughts: China is the Donald Trump of the Steel Industry & More...

Written by John Packard

This evening I was talking with a large steel buyer about the fundamentals of the steel market and how long can prices continue to go higher. I told him that I had spoken with another large steel buyer earlier today who told me they could not understand how the fundamentals have changed in China. They still have hundreds of millions of tons of excess capacity and still prices have surged over the past eight weeks in China. He told me that the Chinese mills have lost billions of dollars this past year and the banks are now calling the shots. The losses were too great. The mills had to change their stripes and now become profit generating centers. It dawned on me in a bolt of mental clarity: China is the Donald Trump of the steel industry…

Everything and everyone seems to be rushed right now. Buyers are scrambling to get orders in, mills are looking for the right time to open order books, foreign offers are few and far between and everyone is trying to make sense of all of this. Feels just like 2004 when I started writing Steel Market Update for my then steel buying customers. The one problem with being rushed is people make mistakes. For some reason I have been struggling to get my numbers right with AK Steel. I sent out another almost correct article in our last newsletter and I am sure a number of you caught my boo-boo. Cold rolled at a minimum of $680 per ton is $34.00/cwt (not $32.00/cwt) and galvanized base price minimums out of AK Steel is $690 per ton which is $34.50/cwt.

This is my The Truth About Selling Steel reminder of the day – sales people have to be very careful quoting in these kinds of markets. It is very easy to look at last month’s pricing or the last price quoted and to requote it even though you realize the market has changed. When sending out written materials to customers take a deep breadth and reread it, compare it against your request for quote sheet or newest price sheet before sending it out.

As you can see tonight’s issue is quite long (even for our standards) and I actually removed 5 articles from tonight’s issue. You can find articles about new home and existing home sales on our blog. We will have demand and scrap articles in Thursday’s issue. We will also have more about lead times, allocations and comments from buyers in Thursday’s issue.

A note to our Premium level members: We placed the Power Point presentation of last week’s flat rolled steel market trends analysis on our website for your review. Premium members can find the presentation after they have signed into the website. It is located under the Analysis tab.

We are looking into the Section 337 complaint filed by US Steel today which attorney Lewis Leibowitz described to me this afternoon as being about the theft of trade secrets (remember when US Steel was reportedly hacked by the Chinese…). He called the move “bold, but not impossible.” We have not yet seen any evidence and perhaps we will learn more at 8:30 AM tomorrow morning when USS is scheduled to speak to analysts about their Q1 earnings. Stay tuned and don’t forget to come to Atlanta early on August 29th to listen to Mr. Leibowitz discuss the antidumping, countervailing duty, any potential Section 201 trade complaints as well as this Section 337 complaint (and the changes in the trade law). Lewis will be the “pre-Summit” portion of our 6th Steel Summit Conference program.

We are not going to release names and company names that are already registered quite yet. My preference is for our attendees to be able to find specific names of our attendees through our SMU Conference App which is available through your local App store. What I will say, however, is we already have twice as many people registered today as we did at the end of May 2015 for last year’s conference. For those of you who did not attend our 2015 Steel Summit we ended up with just shy 300 attendees.

Registration is open and if you are unable to attend please tell your suppliers, customers and steel friends to come in your place. You are also welcome to register through our office at: 800-432-3475.

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

John Packard, Publisher

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