It appears that the market is being set for the next round of flat rolled price increases. With benchmark hot rolled averaging $745 per ton, which is essentially at the levels suggested by ArcelorMittal USA in their last announcement, then there is nothing to stop another increase. I heard from a buyer earlier this week that Nucor was already quoting $38.50/cwt ($770 per ton) and an end user told me yesterday that their prices were raised $40 per ton this week. My gut tells me to expect something like $40 to $60 per ton with this next announcement. AMUSA may come out with an $800 HRC “minimum” base, since they have essentially no spot to sell anyway. We should see something soon.
Imagine where prices will go should President Trump issue some form of duties/tax/quota on foreign steel. It sounds like he wants to charge an eye for an eye; if the exporting country has a 10 percent duty on imported steel into their country, then the U.S. would charge the same duty. I don’t know how this would work with AD/CVD penalties already in place. Like the price increase announcements, we will soon know since we are within the 60-day window for President Trump to make a decision. If your company is for or against the idea, now is the time to let your congressman or the president know what you believe should/should not happen.
We have had a number of registrations for the next Steel 101 workshop and there are only a few spots left. That workshop will be in Merrillville, Ind. (just outside of Chicago) and will include a tour of the NLMK Portage steel mill. Details and registration are at www.SteelMarketUpdate.com/events/steel101.
We only have a couple of sponsor spots left for this year’s SMU Steel Summit Conference. Contact Jill@SteelMarketUpdate.com or myself should you have any questions (800-432-3475). We have a number of exhibition slots available, which Jill also handles. We anticipate 750-800 executives at this year’s conference. The dates are Aug. 27-29. The conference is in Atlanta at the Georgia International Convention Center, which is located adjacent to the Atlanta International Airport. Register at www.SteelMarketUpdate.com/events/steel-summit.
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Individuals associated with an SMU member company are eligible for membership discounts to any of our events. Right now we have Steel 101 and SMU Steel Summit registrations ongoing, and member companies receive discounts of $100 per person.
I noticed one of the other steel conferences recently sent out a notice that their registration is now open and they have “early bird” rates as much as $900 per person lower than their published pricing (which is well over $2,000 per person). Our rate is $1,275 per person for the SMU Steel Summit before member discount and multiple person discount. The largest discount we offer is $200 per person. I made a decision a few years ago that we would be better situated and honest with our customers to publish a fair price and to conduct the conference at a location that is economical to get to and with hotel rates under $200 per night. (I think our blocked rates right now are $149-$159 per night). There is no need to take a cab or Uber to our venue as there is a free light rail train which runs directly from the airport to the hotels and convention center.
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Domestic prices have been sliding since the beginning of the year, and I don’t see any obvious reasons why the slide might stop this week. But let’s put the timing of a bottom aside for a minute. The question among some of you seems to be whether we’ll see another price spike, or at least a “dead-cat bounce,” before the typical summer doldrums kick in.
I’ve had discussions with some of you lately about where and when sheet prices might bottom. Some of you say that hot-rolled (HR) coil prices won’t fall below $800 per short ton (st). Others tell me that bigger buyers aren’t interested unless they can get something that starts with a six. Obviously a lot depends on whether we're talking 50 tons or 50,000 tons. I've even gotten some guff about how the drop in US prices is happening only because we’re talking about it happening.
We’ve all heard a lot about mill “discipline” following a wave of consolidation over the last few years. That discipline is often evident when prices are rising, less so when they are falling. I remember hearing earlier this year that mills weren’t going to let hot-rolled (HR) coil prices fall below $1,000 per short ton (st). Then not below $900/st. Now, some of you tell me that HR prices in the mid/high-$800s are the “1-800 price” – widely available to regular spot buyers. So what comes next, and will mills “hold the line” in the $800s?
Everyone knows the old saying that “a picture is worth a thousand words.” Just because it’s a cliché doesn’t mean that it’s wrong. A lot of inked has been spilled trying to figure out why prices are falling now. I thought it might be as simple as this: Market dynamics in the fourth quarter (UAW strike, companies buying ahead of an anticipated post-strike price spike, etc.) pulled forward restocking activity that typically happens in the first quarter.
What a difference a month makes. There are a few full bulls left in the room, but their numbers are dwindling. We’ll release results of our full steel market survey tomorrow afternoon. I took a sneak peak at the data on Thursday. And more people than I expected think that US hot-rolled (HR) coil prices will be in the $700s per short ton (st) two months from now. Vanishingly few think prices will be above $1,000/st in mid-April.