Final Thoughts

Final Thoughts
Written by John Packard
August 22, 2016
As I wander around the industry talking to buyers and sellers of steel I am always asking and listening for the signs of change. These are “warnings” to my ears and I heard one earlier today that needs to be pursued further and I think we will have the opportunity to do so at our conference next week. A large service center who is a supplier to the automotive industry was telling me this afternoon that their company has seen an abrupt slowdown in releases from their automotive customers. I was told, “After July shutdowns… the first couple of weeks of August the releases just aren’t there.” I asked if the automotive rolling schedule (normally 12 weeks of orders) had changed and we were told “no, the rolling schedule is still the same.” Inventories of unsold automobiles (and trucks) are high and their company was definitely concerned about the flow of incoming steel not matching the releases…
A service center executive told me this morning, “Hot rolled is hitting the skids, mostly for volume, not necessarily for the little guy.” He went on to say, “I don’t see much hope for this market. It will continue to go down.”
I also spoke with one of our speakers who will address both steel and other metals and where they see the products based on what the “charts” have to say (hedge, don’t hedge, etc.). She was bullish on metals like nickle and aluminum and bearish on steel. To be fair she intends to look at the steel market closely because the bearish sentiment may be over-cooked compared to what is happening with other commodities.
Chinese prices have been rising. One of the conversations I had today was about what converters are paying for Chinese substrate and that prices are moving higher in Asia. I know this topic will come up at our conference.
Demand, mixed messages today. Construction is looking good. Auto – something to watch. Energy – coming back but from a very deep hole.
I am looking forward to our Steel Summit Conference. I think the timing is perfect. I think we have great speakers for the topics that need to be discussed – both in steel as well as a couple of management topics – and we have a fantastic audience.
I leave for Georgia in the morning and I hope to see many of you in Atlanta in 5 days time.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher

John Packard
Read more from John PackardLatest in Final Thoughts

Final Thoughts
Can technology help with pig iron and DRI/HBI tariffs?

Final Thoughts
Tariff-related noise aside, there is one basic factor keeping buyers on the sidelines. Despite recent declines, HR prices remain at historically high levels. And there is no obvious support to keep them there.

Final Thoughts
United Airlines raised eyebrows earlier this month when it provided two forecasts for 2025 – one assuming a relatively stable economy and another assuming a recession. The reason? Uncertainty around the impact of President Trump’s policy shocks on the broader economy. And it sometimes feels like we’re seeing a battle between those two narratives (stable vs recession) play out within in the pages of this newsletter.

Final Thoughts
Despite some scary headlines lately (especially about Trump potentially firing Fed Chair Jerome Powell) this is not October 2008 (financial crisis) or March 2020 (onset of the pandemic). But it sure seems like we’ve taken a relatively strong economy and poured a thick sauce of uncertainty over it.

Final Thoughts
I put some of our survey data through ChatGpt, with interesting results.