Final Thoughts
Final Thoughts
Written by John Packard
October 17, 2016
For those who have not been members for a long period of time or who may be new to Steel Market Update this section, my Final Thoughts, is the one area where I get to pontificate (provide my opinion) on subjects of interest to me.
Today I want to briefly address the elephant in the room – the one question that I get on an almost daily basis. When will steel prices bottom?
It seems like it always happens sooner than people realize. It looks like scrap prices may have hit bottom this month (October delivery). If scrap firms come November that will be an early sign of the change to come. Service center inventories (flat rolled) are below 5,000,000 tons and we should expect some restocking as we move into the New Year (assuming demand will be decent in 1Q). World steel prices are rising due to higher costs for iron ore, coking coal and other inputs. China is starting to crack down on polluting mills and illegal operations (whether it continues is a big question mark).
We are also close to that time of year when, 1) mills try to complete their order books for the calendar year (thus the “cheap” offers that may be out there right now below our range), 2) Once lead times start moving into 1Q 2016 and/or mills are comfortable with their 4th Quarter book look for one of the mills to make a price move. In the past we tend to see the move in the mid-November to Thanksgiving time frame. Will this year be a typical year?
Buyers need to remember when the first “strong” announcement is made that is supported by multiple mills the cheap offers will dry up quickly.
I would like to hear from you – what do you think about the chances of prices bottoming over the next few weeks and the mills pushing for a bottom by no later than Thanksgiving? You can send me your thoughts at: John@SteelMarketUpdate.com
A quick note to those who are attending our Steel 101 workshop in Memphis, Tennessee. The hotel has advised they are close to sold out so if you have not made a reservation you need to do so now. Our special rate will not be available next week.
As always your business is truly appreciated by all of us at Steel Market Update.
John Packard, Publisher
John Packard
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