Final Thoughts
Final Thoughts
Written by John Packard
November 9, 2016
On Wednesday of this week I participated in the monthly HARDI conference call (see article in tonight’s newsletter). During the call one of the executives from an east coast HVAC wholesaler told the group that he didn’t believe prices could or would move much higher from here. I disagreed with him. One of the justifications I hear when I speak to executives, who are not in the markets on a daily basis, is weekly production rates are below 70 percent. I have two comments about that, 1) the data is based on no more than 50 percent of the industry actually supplying data and, 2) this is for all products and flat rolled – especially coated flat rolled – are at, or above, 80 percent of capacity. In other words, coated steels are close to full capacity. There is no reason for prices to go down on coated steels, especially when lead times are flipping into Q1 and out of the December doldrums.
It has been my opinion and I want to stress this again, my opinion is bullish on the flat rolled steel industry. I believe prices will move higher and David Feldstein wrote a little about it in our Futures Article tonight but he also wrote about it in The Feldstein which can be found on the Flack Steel website. I suggest you take a few moments and read it.
The U.S. is not able to produce as much steel as the country can consume. This has not been an issue over the past few years because there has been plenty of foreign steel to make up for any shortfall. With world prices going up, commodity prices going up and it looks like future supplies of foreign steel may become limited, well, the scenario is building for a Black Swan event.
I don’t know how a Donald Trump presidency is going to affect the steel industry. We have mentioned this before, does everyone realize that Dan DiMicco is one of Trumps economic advisors?
Everyone needs to keep your eyes and ears open as we watch to see what happens with foreign steel imports in the coming months, what is happening in Canada with USS Canada and Essar Steel Algoma as well as USS Granite City and AK Steel Ashland. I certainly wouldn’t panic about ArcelorMittal bringing back a furnace at Indiana Harbor.
Our January 24 & 25th Steel 101 workshop in Huntsville, Alabama is approximately 50 percent sold at this time. Once again it looks like we will have an excellent group with manufacturing companies, service centers, financial community and steel mills being represented as attendees. The tour for this workshop will be at Nucor Decatur and I am personally looking forward to it as I have not been to this plant in my past. You can find more information about the workshop, costs and how to register on our website: www.SteelMarketUpdate.com.
We are working with a number of mills regarding future workshops. We hope to have one in April/May time frame, one over the summer months and one in October/November 2017.
Someone asked me how many mills our Steel 101 workshop has visited/worked with since we began our workshops in the Spring 2011: NLMK Indiana (2), Severstal Dearborn (2) which is now AK Steel Dearborn, ArcelorMittal Dofasco (1), SSAB Alabama (1), SSAB Iowa (1), California Steel (1), Nucor Berkeley (1), Nucor Arkansas (1), NorthStar Bluescope (1), Severstal Columbus (2) and SDI Columbus (1), SDI Butler (1), Big River Steel (1st time next week) and Nucor Decatur (1st time in January).
We are in active discussions with a couple domestic mills whose names do not appear above and we are hopeful that we will be able to add their names to our list either in 2017 or 2018.
There is a little known policy/offer here at Steel Market Update regarding companies who bring new subscribers to Steel Market Update. If the new company tells us that they were recommended by “ABC” company we will put a $100 credit memo in that companies file which can be used at any point in time during the next 12 months. There are no restrictions as to the number of recommendation credit memos a company can receive. There are no restrictions as to what SMU products it can be spent on (workshops – yes, Steel Summit Conference – yes, Newsletter – yes, Newsletter Upgrade to Premium – yes). We don’t have a sales staff and rely on the good words of our members and the reputation we have built for our company. If you have any questions please do not hesitate to let us know: info@SteelMarketUpdate.com.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
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Final thoughts
SMU had the pleasure of attending the American Iron and Steel Institute's (AISI's) annual general meeting in Washington this week. It was a slow week in our nation's capital, so we were able to take a leisurely stroll around the National Mall and take in the sights. Just kidding. In fact, the meeting coincided with significant trade actions announced by the Biden administration. It included, among other things, additional tariffs on Chinese steel and aluminum.
Final thoughts
Our spot price is little changed this week after moving sharply lower last week on the heels of Nucor’s unexpected price cut. Here’s one thought on that trend: Nucor's weekly HR price (aka, its “Consumer Spot Price” or CSP) has to date functioned almost more like a monthly price.
Final thoughts
What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.
Final thoughts
Last week we wrote about a brief lull in price movement, labeling it a period of wait and see. It did, in fact, turn out to be pretty brief. This week... things are little bit different. Perhaps right now we are more in a period of "hope and pray" or "Here we go, hold on to your hats."
Final thoughts
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.)