Final Thoughts

Final Thoughts

Written by John Packard


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

Latest in Final Thoughts

Final thoughts

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.

Final thoughts

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?