SMU Data and Models
SMU Price Momentum Indicator Adjusted to Higher
Written by John Packard
December 5, 2017
Steel Market Update adjusted our Price Momentum Indicator to Higher from Neutral earlier today. It is our opinion that flat rolled steel prices will rise over the next 30 to 60 days. We last adjusted Momentum on Oct. 18, 2017, when we moved from “Lower” to “Neutral.”
We are hearing from buyers and sellers of flat rolled steel that they expect to see higher prices in the coming weeks. They are expecting good demand in the first quarter, which is where the domestic mill lead times are right now.
A domestic mill source advised SMU this morning that they were waiting for scrap to settle before the next price move is made. “Lead times are in mid to late January. Waiting for scrap to settle formally before making another push. Global is heating up again with cost-push coming back, and inventories in the U.S. are drawing down in our core markets. I am quite bullish about seeing major price increases in Q1.”
There will be fewer tons of foreign steel entering the United States over the next few months. We saw the reduction during the month of November as license data is suggesting imports of about 2.6 million tons. We expect imports will remain low due to higher international prices, duties associated with antidumping/countervailing duties and now the positive ruling on circumvention by Vietnam and China.
There is another trade issue that we cannot ignore. The Section 232 investigation is still out there and the deadline of mid-January is fast approaching. SMU believes there will be some cost associated with importing foreign steel that doesn’t exist now. That cost could come in the form of a tariff or some sort of quota (or both).
SMU is of the opinion that if there are any “Gray Swan” events, they would most likely be favorable to higher steel prices.
John Packard
Read more from John PackardLatest in SMU Data and Models
Steelmaking raw material prices ease in July
The majority of steelmaking raw material prices declined in June, following the same trend seen in May, according to SMU’s latest analysis.
SMU price ranges: HR declines moderate. Are we near a bottom?
SMU’s sheet price ranges slid again this week. But the declines were more pronounced on tandem products whereas prices for hot-rolled coil held roughly steady.
Some SMU Key Market Indicators improve, others remain near historic lows
SMU’s Key Market Indicators include data on the economy, raw materials, manufacturing, construction, and steel sheet and long products. They offer a snapshot of current sentiment and the near-term expected trajectory of the economy. All told, nine key indicators point lower, 16 are neutral, and 13 point higher. One thing worth noting: The nine indicators pointing lower are all lagging indicators. Many of those pointing upward are leading indicators.
SMU survey: Steel Buyers’ Sentiment Indices rebound
SMU’s Steel Buyers’ Sentiment Indices both saw improvement this week. Current sentiment ticked higher but remains near the four-year low seen earlier this month. Future Sentiment continues to indicate that buyers are optimistic for future business conditions.
SMU market survey results now available
The latest SMU market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.” Historical survey results are also available under that selection. If you need help accessing the survey results, or if your […]