Final Thoughts
Final Thoughts
Written by John Packard
February 26, 2018
The next few months are going to be a wild ride (in my opinion). There appears to be a cascading “Gray Swan” event in process prompted by Section 232 and expectations associated with 232, which now are for Trump to announce a 24 percent tariff on all steel products and let the chips fall where they may. Those companies who have run lean inventories are now at risk of running out of steel. However, remember that Steel Market Update does not agree with the Metals Service Center Institute analysis of the number of month’s of supply, which we now calculate to be 2.8 months as of the end of January. We are being told there is a lot of service center to service center spot inventory being traded right now.
So, where are we? To be honest, I am not quite sure and I am working hard to find out. There will be much more and deeper reporting on the key drivers to the market in the coming days and weeks. Watch for our articles, blog posts on our website and Tweets (#SMUsteel), LinkedIn (Steel Market Update group as well as my personal page) and Facebook (Steel Market Update).
I wrote an article about the comments made by former Undersecretary of Commerce for International Trade under the Bush Administation (2001-2005). His name is Grant Aldonas and he is, in my opinion, one of the best people who can relate to many issues the steel industry will be dealing with come Aug. 27, 28 & 29, 2018. He has graciously accepted an invitation to speak at our conference and share his insights into government, trade, Section 201 under Bush and its relationship to Trump’s Section 232 (by the way, there was also a Section 232 investigation on steel in 2001 after 9/11). He is an excellent speaker and I believe will be well received by those attending the SMU Steel Summit Conference in Atlanta. Go to www.SteelMarketUpdate.com/events/steel-summit for details and registration.
I also want to thank Steel Dynamics who has come on as the sponsor of our Monday late afternoon/early evening networking/cocktail party, which this year will be held at the Georgia International Convention Center as we outgrow the Marriott facilities. We now have only two sponsor spots left – one break and one for the early morning pastries. Neither is a break-the-bank sponsorship level. If you are interested, please contact Jill@SteelMarketUpdate.com or myself at John@SteelMarketUpdate.com.
I have been traveling over the last two days and I want to thank my staff for doing a great job with tonight’s newsletter as I was behind closed doors for most of the past two days. Thank you to Tim Triplett, Sandy Williams, Brett Linton and Peter Wright.
Much more to come.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
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Final thoughts
What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.
Final thoughts
Last week we wrote about a brief lull in price movement, labeling it a period of wait and see. It did, in fact, turn out to be pretty brief. This week... things are little bit different. Perhaps right now we are more in a period of "hope and pray" or "Here we go, hold on to your hats."
Final thoughts
Unless you've been under a rock, you know by know that Nucor's published HR price for this week is $760 per short ton, down $65/st from the company’s $825/st a week ago. I could use more colorful words. But I think it’s safe to say that most of the market was not expecting this. For starters, US sheet mills never announce price decreases. (OK, not never. It has come to my attention that Severstal North America rescinded a price increase back on Feb. 14, 2012. And it caused quite the ruckus.)
Final thoughts
Is it just me, or does it seem like the summer doldrums might have arrived a little early? I could be wrong there. It’s possible we could see a jump in prices should buyers need to step back into the market to restock. I’ll be curious to see what service center inventories are when we update those figures on May 15. In the meantime, just about everyone we survey thinks HR prices have peaked or soon will. (See slide 17 in the April 26 survey.) Lead times have flattened out. And some of you tell me that you’re starting to see signs of them pulling back. (We’ll know more when we update our lead time data on Thursday.)
Final thoughts
Everybody has a plan… until they’ve dealt with volatility in the HRC market. While Mike Tyson’s original quote was about getting punched in the mouth, it’s unlikely the ex-champ has gone many pricing rounds with hot-rolled coil.