Final Thoughts
Final Thoughts
Written by John Packard
January 2, 2019
The New Year has started, the pace is a little slow for some, others have told me that their order books got a kick start yesterday. I have to imagine the differences are based on geography and product.
This afternoon I had an interesting conversation with the head of commercial for a domestic steel mill. He told me that at the current price levels the domestic mills would be “foolish” not to compete and take foreign orders. A good example is hot rolled being offered out of Mexico, which is being priced around $720-$740 per ton delivered into USA customers (within reasonable distance/freight rate from the border). Domestic prices are being offered at $700-$760 per ton, FOB the mill. Other than freight and some potential quality concerns, there is very little incentive for the U.S. steel buyer to buy foreign steel.
We were also told that there were coated base price numbers in the mid-30s. The domestic mills can afford to take light gauge coated business at a $36.00/cwt-$37.50/cwt base with extras and compete for the foreign tonnage. I did not collect numbers that low from steel buyers this week, so our price range does not reflect them. However, steel buyers should be aware that there are “foreign fighter” prices out there on galvanized and Galvalume steels.
T
he SMU Price Momentum Indicator on flat rolled continues to point toward lower prices over the next 30 days, while our plate indicator is at neutral as we expect prices to move sideways.
Scrap prices are being referenced by the scrap/steel community as moving lower in the month of January. The talk is $20 to $30 per gross ton. There have not been any trades concluded that we are aware of this month and settlement is not expected until early next week.
Lower scrap prices provide the mills more flexibility in their pricing. You can also expect steel buyers to resist any move to push prices higher if scrap moves the $20-$30 being discussed.
SMU will have more on the mood of the market and possible price hike in Sunday’s issue of SMU.
A second reminder that SMU newsletters will be undergoing some changes in how we price the product. We will be raising pricing on all products by 10 percent beginning in February. We are going to reduce the number of options to make it easier, and we are going to offer a better program for companies with a number of employees to be able to offer our products to everyone at one price. You can contact Paige Mayhair at 724-720-1012 or by email Paige.Mayhair@crugroup.com if you would like to discuss your membership, pay for 2019 early or learn more details about the new programs to be offered. We are still working on ironing out the wrinkles, but I want you to be aware that changes are coming so you can be prepared to take advantage of what works best for you and your company. You are also welcomed to contact me with questions – 800-432-3475 or John@SteelMarketUpdate.com
CRU will be hosting an aluminum conference in Atlanta that will begin just as the SMU Steel Summit Conference ends on Wednesday, Aug. 28, 2019. I will be working with CRU to get information to our members who might be interested in attending one or both conferences.
I mentioned yesterday that the CME Group will be conducting a program on steel and scrap futures on Monday morning prior to the start of the SMU Steel Summit Conference on Monday, Aug. 26.
Registration is open for the 2019 SMU Steel Summit Conference, and I believe the links to the hotels are live on our website. I suggest that you plan on attending this year’s event early. We will sell out all of the hotels in the Gateway Convention area. I was just in Atlanta this past weekend and noted there are at least two new hotels under construction, but they will not be ready for this year’s event. They will be ready when we return to Atlanta in 2020 on Aug. 24-26.
We still have seats available for the Jan. 29-30 Steel 101 workshop in Starkville, Miss. We will be touring the SDI Columbus steel mill. You can register online and find more details by going to www.SteelMarketUpdate.com/Events/Steel101. You can also give me a call should you have any questions.
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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