Closing in on 2016 Price Highs

One of the items discussed in the HARDI steel conference call held this morning was the concept of market cycles beginning with higher lows which then lead to the establishment of even higher cycle highs.

The below graphic is of hot rolled weekly average pricing over the past two years (graphic comes from our website).

Can prices move even higher from these levels? To answer that question let’s take a look at January 2010 through today to see what the graphic looks like.

The market highs achieved during 2014 was $685 per ton on hot rolled. We are $65 per ton away from 2014 levels and Price Momentum continues to be for higher prices over the next 30 days. SMU believes we will take out the 2016 levels over the next few weeks.

SMU heard from one of the domestic steel mills who reported to us today, “We are seeing a LOT of small orders that add up to good volume. People buying weekly instead of monthly in order to keep their inventory under control.” 

This mill then went on to provide commentary about what buyers should be doing, “If I were a customer…I would not buy any more than the absolute minimum at these prices unless my sales guys were setting the world on fire, or unless the lead times were 8 weeks plus and neither  of those is happening. People are paying increases but there is no fear of shortage…price resistance and having no clear signal to load up = restraint.”

Restraint and controlling inventories could be another way of saying prices still have room to move.