Final Thoughts

Final Thoughts

Written by John Packard


For those who missed my comment earlier, Acero Junction hot strip mill is rolling at close to full right now. Our sources are advising us that the mill is running about 50,000 tons of HRC. They have prime slabs on the floor and incoming from Brazil (one of the reasons why semi-finished imports continue to grow). They have 48″ and 60″ material as well as some other odd widths. Our understanding is the mill is trying to remain close to the CRU number. We are being led to believe their numbers are in the $610-$640 range.

Late last week I got a note from one of my trading friends closely connected to China. He told me the Chinese market is in “turmoil” as iron ore has been dropping and the port prices were actually $3/dmt lower than what was being published by the indexes. He told me billet prices out of China were $420 metric ton FOB Stowed for May shipment. He also told me to expect flat rolled prices to “soften” in the coming days.

I remembered a couple of years ago Peter Meyers, Executive Vice President of Metalico, spoke to our 2015 SMU Steel Summit Conference and as part of his presentation he described the competition between Chinese billet to Turkey vs. 80/20 scrap from the United States. He told our group that it took $60 per metric ton to convert billet to rebar and $180 per ton for scrap. With billet at $420/MT prior to freight this means the number scrap needs to compete with is somewhere around $490-$500/MT.

Recent sales to Turkey have been $275-$280/MT delivered out of the east coast USA ports. Add the conversion costs of $180 and you come up with $455-$460 which is much better than buying Chinese billet at $420.

By the way, I was able to find these data points because since I attended the 2015 and 2016 SMU Steel Summit Conferences. I still have access to the presentations made in each of the conferences through the SMU Events App. I have used data from past presentations on a number of occasions and this is one of the ways we feel our conference learning experience and access to information lasts longer than other conferences that might be are out there. We will have our upgraded SMU Events App again this year and, with the help of our friends at Pacesetter, we will have free internet access for all of our attendees at the 2017 SMU Steel Summit Conference.

A reminder that I will be traveling to Toledo, Ohio on Monday morning as we get ready for our sold-out Steel 101 workshop. I will return to my office on Thursday. In the meantime Diana (772-932-7538) and Brett (706-216-2140) are available to answer any questions or to take registrations for our SMU Steel Summit Conference or our next Steel 101 workshop which will be in Ontario, California on June 22 & 23 and will include a tour of the California Steel Industries (CSI) steel mill. You can also reach them at: info@SteelMarketUpdate.com.

As always, your business is truly appreciated by all of us at Steel Market Update.

John Packard, Publisher

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