Final Thoughts

December 3, 2018

I took our coated numbers down pretty hard this week. I had been collecting lower numbers over the past few weeks. However, they would pop up sporadically. Come and go for no reason other than a mill decided that the order was too good to pass up, that it fit a hole or that at the kind of margins the mills are making it was just too hard to walk away.

I discussed this with the head of commercial for one domestic mill and he was candid when I asked about finding $40.00/cwt base prices in the marketplace. “Coated has eroded a bit more, but Galvalume is above that,” he said. “Look, the special deal pricing/import fighter has been under $40 for eight weeks already…. So, it’s not surprising if some of that seeps into ‘regular’ business at the base price. Having said that, it seems we are not seeing the same level of price cutting that was going on 15 or 30 days ago. Perhaps the day-in day-out small tonnage price is eroding, but the big ton price is staying fairly stable.”

One service center executive told me there are special prices out there “if you have a good story to tell.”

I guess everyone needs to figure out what story is going to work with what supplier…?

Something to think about and watch closely – if foreign imports continue to drop and service centers have been taking their inventories down due to slipping spot pricing (and the desire to buy at the lower end of the range), at what point does steel become in short supply?

Just heard that scrap settled sideways in Detroit. No word yet on prices in other regions.

Our service center inventories for October were at 2.6 months of supply based on our proprietary analysis of the data we are collecting from our participating distributors. We are also collecting data about how much material is on order, and we are forecasting for those data providers what direction we think service center inventories are headed in the coming months. Right now, that data is only being shared with our data providers. If you would like to become a confidential and protected data provider, please contact DeWayne.Tuthill@crugroup.com for details.

You can also contact me. However, I am in Atlanta and won’t return to my office until Thursday morning.

For our distributor data providers, we have started collection of November data. If you have not received your invitation to participate, please reach out to DeWayne Tuthill at the email provided above.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, President & CEO