Steel Products

2018 Steel Pricing - Year in Review
Written by John Packard
December 23, 2018
Twas the night before Christmas 2017
Steel buyers were happy
All nestled in their beds
No thoughts of turmoil running about in their heads
Little did they know
Little did they dread
2018 was staring at them
While dreams of sugar plums danced in their heads
The last three months saw prices move higher
2017 had ended with hot rolled on fire
The benchmark average was $640 per ton
Twenty dollars higher than when the year had begun
The New Year of 2018 started on an up note
Prices continued to rise
buyers thought it was a joke
Surely prices would fall, and soon, so they thought
By the end of January new numbers began with a seven
As February ended another hundred had been added
OMG is what many steel buyers said
OMG will these prices ever end?
Little did they know what was right around the bend
President Trump and his little friend
Wilbur Ross reported steel is a must
Trump put a tariff on it of twenty-five percent in a huff
Prices jumped, both foreign and domestic
New numbers began with an eight
Did the mills know something the buyers did not?
At 70 percent capacity levels how could prices move so high?
Twenty five percent was the number he chose
Twenty five percent be it slabs, plates, sheet or coil
Twenty five percent with delivery deadlines no one could meet
And an exclusion request that was clunky at best
The market went crazy and prices continued to rise
By early March the numbers began with an eight
Closing in on the $890 which was the previous high seen seven years earlier
Steel buyers were amazed at how high the numbers had gone
May came and went
Exclusion requests were made
Energy spent
Few requests were granted, at least not then
Domestic mills filed exceptions
Thousands we were told
Foreign and domestic prices continued to rise
Buyers were concerned the market was growing old
By the middle of June a nine did appear
We were now on the path to challenge a record year
The highest prices seen during my 40+ year career
Was $1,070 just before the crash of 2008
Alas it was not to be
Prices peaked in late July at $915 per ton
Prices peaked as the summer was in full swing
From that point on the direction changed
Capacity utilization rates rose past 80 percent
The number selected so the mills could pay their rent
Steel buyers resisted paying prices so high
With costs to produce around $600 mills were willing to deal
Twas the night before Christmas 2018
Steel buyers are happy all nestled in their beds
Prices have fallen to $745 as the year comes to a close
Buyers are still pushing even as they lay in repose
This is something for another year
This is something steel buyers do not fear
The spread between foreign and domestic has changed
With the mills aggressive their books will remain clogged
Mills still dealing
Cost still low
We will have to wait
To see how low prices will go
Twas the night before Christmas
We are all nestled in our beds
Dreaming of good times
With family and friends
It won’t be long now
That we celebrate the New Year
It won’t be long now
That the game begins anew
Steel buyers trying to buy lower
Mills resisting their moves
The natural ebb and flow of business
Determining where prices will go
Or will the Trump administration come back with a new black swan event in the New Year?
We worry about 232, exclusions and such
Canada, Mexico will at some point gain entry
If the economy falters are the tariffs the president’s friend?
What of auto 232?
And China and the Section 301s?
2019 Promises to be another year of turmoil
Steel buyers need to sleep now, soon they will be burning the midnight oil.
Twas the night before Christmas
All nestled in our beds
With visions of sugar plums
Dancing in our heads
We wish a Merry Christmas
And a Happy New Year, too
We are looking forward to a good night’s sleep
Just like you
For 2019 is dancing about in our heads
What direction will prices go as the New Year begins?
We will think about that later, I think
For right now maybe it is best to just get up and have a drink…
Merry Christmas and a Happy New Year to all of our friends in the industry we love.
Steel Market Update

John Packard
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