Final Thoughts
Final Thoughts
Written by John Packard
January 3, 2018
We are hearing that ferrous scrap prices will rise by $20 to $30 per gross ton this month. Negotiations continue at most of the mills, but we did learn of one Detroit mill settling yesterday up $20 on primes (busheling/bundles) and up $30 on the other grades. The cold weather, strong exports and low inventory levels at the steel mills are pushing prices higher. We will have more on the scrap market and where things settled in Sunday evening’s issue.
The week has started with a bang as Nucor, U.S. Steel, NLMK USA and AK Steel all have announced $40 per ton price increases, while the West Coast mills of California Steel Industries and USS/POSCO have taken their prices up by $30 per ton. Reaction from steel buyers and actual price offers will be coming to light in the coming days. We heard from a few buyers of spot hot rolled being offered anywhere from $32.50/cwt ($650 per ton) to $35.00/cwt ($700 per ton) depending on the mill and location. It will take one to two weeks before we are able to determine if the increases “stick” (and what does “stick” mean).
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John Packard, Publisher
John Packard
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Final Thoughts
Another day, another massive gap between the news and market sentiment. On the news side, we’ve got war in the Middle East. The devastation facing western North Carolina coming into tragic focus. And the outcome of the presidential election remains a coin toss, according to current polling.
Final thoughts
There are markets where the headlines and the prices are both crazy. This does not appear to be one of them, at least not yet.
Final thoughts
Washington loomed large in our surveys this week. Two things actually: the upcoming presidential election and the trade case against imported coated products from 10 nations.
Final thoughts
Thanks to everyone who attended our Steel Hedging 101 workshop in Chicago on Wednesday. I learned a lot from StoneX Group’s Spencer Johnson, who instructs the course, and from your good questions. One thing that Spencer said sticks with me as I write this column. Namely, that momentum drives steel prices more than other commodity markets. If you watch steel futures, you’ll see up days and down days. But it’s rare to see the momentum shifting back and forth within any given day.
Final thoughts
SMU's prices ranges for flat-rolled steel were mostly sideways on Tuesday even as futures market shot higher. I got some questions as to why hot-rolled (HR) coil futures shot higher. As best as I can tell, it might have been in response to news that China plans to roll out stimulus measures. We have details on those measures here thanks to our colleagues at CRU. The chart below gives you some idea of just how sharply upward the move in HR futures was earlier on Tuesday: