The first advice I have for steel buyers is don’t panic. Nothing has been announced on 232 yet. Someone mentioned to me this evening that in reality the president hasn’t made a bad decision yet (I am going to ignore Russia – just talking about business related issues). Section 232 may be the first, but the betting is he will figure out a way to keep his promise without alienating the rest of the world and starting a trade war. So, don’t panic. Let’s see what happens over the next few weeks and then we will meet again to see what needs to be done next.
Most of the trading companies are doing just that. Taking a breather for a few weeks, letting the market settle a bit and waiting for calmer heads to prevail.
Registration for our March Steel 101 workshop is sold out. If you are interested in sending someone to the Merrillville, Ind., workshop, which includes a tour of the NLMK Portage EAF mill, please contact us at info@SteelMarketUpdate.com and we will advise if we can squeeze another person into the workshop. I will announce our next workshop date and location soon.
I want to welcome Big River Steel as a corporate sponsor to this year’s SMU Steel Summit Conference. BRS joins Pacesetter, Bank of America, Crowe Horwath, Heidtman Steel, Nucor, Modern Metals, Magic Coil Products, Mill Steel, MidWest Materials, Red Bud Industries, All Metals Service and Warehousing and Alliance Steel. We now have only three sponsor slots left. If you are interested in becoming a sponsor or exhibitor, please contact Jill Waldman at Jill@SteelMarketUpdate.com or myself at John@SteelMarketUpdate.com
I will have more about what is being said at the Port of Tampa Steel Conference in Thursday’s issue of SMU.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
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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.
Sheet prices have fallen again this week on shorter lead times, higher imports, and potentially higher inventories. (We’ll see for sure when we release our service center shipment and inventory data next week.) I remember reporting almost exactly the same thing about a month ago and getting a fair amount of pushback. Not so much these days.