Final Thoughts
Final Thoughts
Written by John Packard
December 14, 2016
There are a number of players in the market that are overly concerned (in my opinion) about the restart of the USS Granite City hot strip mill (they are not yet restarting the two idled blast furnaces so they are not adding any new raw steel production into the market) and Mingo Junction (reported to begin rolling slabs in February). Big River Steel has started melting scrap and produced their first hot rolled coil. Having been through a number of start-ups myself (galvanized lines at Winner Steel now called NLMK Sharon Coatings) and watching the start up of the ThyssenKrupp Calvert operation, I know it takes time to work the bugs out of the system. I expect BRS to have minimal impact on the HR, CR and coated markets during the 1st Quarter 2017.
Between now and the end of the year I am going to once again go out to my trading company friends to see how much foreign steel is actually being offered and what we should anticipate for hot rolled, cold rolled and coated imports during the 1st Half 2017.
I know hot rolled offers have been few and far between. The two main reasons: dumping suits and price spread.
Why have cold rolled and coated imports been harder to dash? The price spread between hot rolled and value added products used to be $100 to $120 per ton. As of Tuesday of this week cold rolled spread against hot rolled base was +$210 per ton as was galvanized. The extra $90 to $110 per ton allows for plenty of foreign steel to become competitive and/or cheaper than the domestic spot markets. It will be harder to shrink the cold rolled and coated tonnage as long as this elevated spread exists in the domestic market.
Even so, I am hearing that foreign offers are coming with higher price tags. As the domestic mills move, most of the foreign suppliers are moving in kind.
What might keep buyers away from buying imported cold rolled and galvanized are the lead times it takes to get foreign orders produced and shipped. If you are talking about steel arriving 5 to 6 months from now all of a sudden the risk factor begins to rise. Do you think domestic prices will continue to rise when we are talking about May and June lead times 2017?
Weather up north if brutal and it is only the 15th of December. Will this be another year when cold weather forces a furnace off-line and/or freezes the Great Lakes so the ore boats can’t run at the beginning of March? Something to watch and think about.
I was asked about our Steel 101 workshops since our January workshop sold out so quickly and now has a waiting list. We intend to host at least four Steel 101 workshops next year and that number could be expanded to five if the demand is there. We are in negotiations with a couple of “new” mills to the SMU workshop program and we are hopeful that at least one if not both of them will be added during 2017. After our January workshop, my expectation is to add a new workshop either in March or April, probably in the Midwest/Ohio Valley area. I will have more on this as soon as we conclude our discussions with the mills in question.
Since I am talking about our Steel 101 program I want to take a moment to thank all of the mills who have been working with us on past workshops: NLMK Portage, California Steel, Severstal Dearborn (twice) which is now part of AK Steel, Steel Dynamics Columbus (twice, once as Severstal Columbus), Steel Dynamics Butler, Nucor Berkeley, Nucor Arkansas, Nucor Decatur (January 2017), SSAB Alabama, SSAB Iowa, Big River Steel and NorthStar Bluescope.
I hear back from past students from time to time and many are progressing through their company’s organization. I trust our workshop helped propel them on their way. If you were in one of our past Steel 101 workshops and you have a story to tell please send it to: John@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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