Final Thoughts
Final Thoughts
Written by John Packard
July 20, 2016
The spread between hot rolled and cold rolled/coated steels continues to be at dangerous (my opinion) levels. The U.S. steel industry has been systematically “building a dam” (Lewis Leibowitz words) around this country in order to prevent what they call unfairly subsidized and unfairly traded plate, hot rolled, cold rolled, galvanized and Galvalume steels. The combination of restricting domestic production with the close-down of the hot end (steelmaking) at AK Steel Ashland and US Steel Granite City along with the affirmations of dumping being reported by the U.S. Department of Commerce has taken U.S. steel prices out of sync with the rest of the world. The domestic mills are getting short term benefits but, the long-term consequences could be quite a different story.
“The high domestic pricing is causing our customers to look offshore for their products and you can’t blame them. We can offer the best service and delivery but when offshore goods are 25% to 30% below our costs, we can’t compete.” This quote was left behind by a manufacturing company as they participated in our mid-July steel survey. Our Sentiment Index high optimistic trend has been broken and we will have to wait and see if there are long-term consequences to the building of the dam without balancing the competitiveness of the domestic manufacturing industry.
We believe our Sentiment Index is a forward looking indicator and it has peaked and begun to become more pessimistic. Don’t get me wrong, Sentiment is still well within the optimistic range of the index only not as high as it was two and four weeks ago.
Next week we will report some of the thoughts of one of our keynote speakers, Dr. Alan Beaulieu of the Institute for Trends Research. ITR is picking up both positive and negative economic data. We will give you his thoughts as to what direction he believes the market will go from here and, of course, those who will be attending our 6th Steel Summit Conference will get his detailed analysis of both the economic and political situation – which should be quite interesting by the end of August…
Tomorrow (Friday) we will produce our Service Center Apparent Excess/Deficit forecast and analysis as well as provide our Power Point presentation on our flat rolled steel market trends analysis from this week. Our Premium members should look for that on Friday afternoon. If you would like more information about how you can upgrade from our Executive level membership to Premium please send us a note: info@SteelMarketUpdate.com and we will do our best to convince you to upgrade…
Registrations continue to be quite strong for the Steel Summit Conference. We still have room to add more attendees. Go to www.SteelMarketUpdate.com for more details about the conference, speaker bio’s, costs and how to register. We are now only 38 days away!
As always your business is truly appreciated by all of us at Steel Market Update – and, we hope to see all of you in Atlanta!
John Packard, Publisher
John Packard
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!