Final Thoughts
Final Thoughts
Written by John Packard
October 15, 2018
It is always a struggle to find the proper footing after the domestic mills make a price announcement that, on its face, appears to be a way of stopping the sub-$800 offers and put a floor (however temporary) to the market. To me, it is quite telling when one or two mills that normally follow very quickly did not. The steel buyers with whom I speak on a constant basis have mixed emotions, but I would suggest the majority are “non-believers.” That doesn’t mean the mills don’t have their supporters; they do.
It was refreshing to participate in the HARDI steel council conference call this morning. The HARDI members are wholesalers who supply galvanized sheet and coil to the mechanical contractors who are actually involved with new and remodeling construction jobs. A couple of points that came out of the discussion: First, I heard that demand was “OK” (as in there was no joy in Mudville, for you baseball fans). The wholesalers weren’t complaining, but the signs of a slowing sure seemed to be suggested. Second, there didn’t seem to be one wholesaler who was a believer in prices moving higher from here. I kept hearing, “They are trying to put a floor on pricing” and “I think it will have an impact, but not until January.”
The head of commercial for one of the mills told me in a text this afternoon, “BTW, who out there thinks that the price increase is part of a V-shaped price pattern heading into Q1? I still think the price increase is meant to stabilize the price trend or moderate the slope, and remove the special deals from the equation. Supply is such – for now – that domestic mills have a Goldilocks situation where they will be able to chip away at the import share and have ample supply to ensure the market is taken care of… In big picture terms, the premium of the U.S. market is moderating. That is not a bad thing as speculative purchases will be less prevalent.”
I did capture a number of the special deals that were sub-$800 in this week’s number. Some of these offers were pulled at the beginning of the week, some maybe not (see article in tonight’s issue about “…sub-$800?”)
I have decided not to touch my Price Momentum Indicator, which continues to be “Neutral” on pricing. I think it will take another week to see if the order books truly support new, higher numbers.
The same mill I quoted also told me that they did take their numbers up $30-$40 per ton and they had a good booking week last week, and they expect that to continue. We are hearing from steel buyers reporting other mills are also saying their order books have been good since the announcements. A good sign of a floor. Now let’s make me a believer by taking the lead times out. I will have a better feel on lead times by Thursday as we are conducting one of our flat rolled and plate steel market trends surveys.
We will also have a good feel for how “negotiable” the domestic mills are regarding pricing. Anecdotally, we are hearing that the mills continue to be flexible if you have tonnage to place.
Moving on to another topic, we have sold out the December Steel 101: Introduction to Steel Making & Market Fundamentals workshop, which will be held in Toledo. We are looking to open registrations for the next Steel 101 workshop, which will be in Columbus, Miss. We will tour the Steel Dynamics (SDI) steel mill and paint line as part of that workshop. I should have complete details available in Thursday’s issue.
Speaking of Thursday, I am speaking to the Association of Women in the Metal Industries dinner for the Cincinnati/Northern Kentucky chapter in Newport, Ky., at Carnegie Hall (which is fitting as I have been working on something special for the AWMI ladies and their guests). You can click here to get last minute tickets.
I want our readers to be aware that CRU is working hand-in-hand with Steel Market Update on a number of projects that will benefit our members, our events and make my life a little easier. There is a new customer service contact in Pittsburgh who will be answering your inquiries and helping you renew (or upgrade). Her name is Paige Mayhair.
Next week I will be in Houston, and that will be my last trip until Dec. 1 when I head out to Austin, Texas, to attend the HARDI annual conference.
One more thing, the largest steel conference in North America will be held on Aug. 26-28, 2019. We had 912 attendees this year. We anticipate that number will grow in 2019. We are prepared to put on an incredible “networking event” that comes with exceptional content. Put monies in your budgets now. Plan on sending more people. We are already booking speakers. We are already planning new surprises for those who attend.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
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