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    Analysis

    January 11, 2017

    Final Thoughts

    Written by John Packard

    I got a note from one of my Asian trading sources yesterday explaining the reason for some of the price volatility seen in the Chinese markets earlier this week. He told us, “We see Ore at below USD50/mt in 2017. Reasons being that China is shutting down capacity big time, probably about 150 million MTS  will disappear in 2017, and that will make a big impact on iron ore pricing John.  Yesterday the Government, unannounced, mandated ALL Medium to Small sized EAF and Induction furnace mills to be closed within June 2017 effective immediately. Integrated mills are TRYING to close out around 100 Million MTS in 2017. The EAF/Induction Medium/Small sized mills are geared to produce 100 Million MTS per year (Total all mills), but they are running at 50% capacity now, 50 Million MTS and closing out those mills l along with Integrated mills, you are looking at 150 million MTS disappearing in 2017. That announcement was one of the factors in the uptick in Chinese prices yesterday and today.”

    So, I continue to be optimistic about the steel industry for calendar year 2017. I am a little concern about the “mixed messages” I am seeing in the marketplace. For example, one mill in the Southeast announced a $30 per ton price increase on cold rolled but over the past few days has been offering the product up $10 not $30. At the same time their galvanized products are on an inquire only basis and are rumored to be sold out (commitments) through June.

    John Packard

    Read more from John Packard

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