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    Analysis

    August 13, 2018

    Final Thoughts

    Written by John Packard

    ArcelorMittal USA probably surprised some customers with their announcement of a $30 per ton price increase on cold rolled and coated products. My opinion is ArcelorMittal is trying to increase the spread between the hot rolled base price and that of cold rolled and coated products. I also think they are trying to boost base prices on coated before they adjust coating extras lower. Historically, AMUSA likes to see a $120-$140 per ton spread between the HRC and CR/coated spreads. Which means if hot rolled is at $900 ($45.00/cwt base), then cold rolled and coated base prices would be approximately $1,020 to $1,040 per ton ($51.00/cwt-$52.00/cwt). In my opinion, the spread has perhaps over corrected a little more than the mills may have liked, coming off historical high spreads from earlier this year. The over correction being created from a strong hot rolled market and not weakness in cold rolled or coated. However, there does not appear to be any momentum to moving CR and coated prices higher in the current market environment. We may see coated transaction prices fall in the not-too-distant future as the mills will have to deal with zinc (used to coat galvanized, electrogalvanized and Galvalume steels), which has dropped from $1.60+ per pound at the beginning of this year to $1.11 per pound today.

    Big River Steel is rumored to be on the block. We have heard Nucor and Steel Dynamics as potential suitors. With HRC prices close to all-time highs, it may not be a bad time for BRS to take the money and run. I imagine that the mill will not go at a bargain basement price. SMU has asked the BRS spokesperson for a comment and we have not yet received one prior to our publication deadline.

    John Packard

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