Final Thoughts
Final Thoughts
Written by John Packard
February 20, 2019
A few weeks back I was having a conversation with the head of commercial for one of the domestic steel mills. The conversation centered around the influence Steel Market Update was having on their order book. In particular, the discussion focused on the SMU Price Momentum Indicator. I was told when our indicator moves to higher, it can have a dramatic impact on that mill’s order book.
I don’t know how accurate that statement was, or might be, this week with the change we just made with our Price Momentum Indicator. I intentionally try not to be “early” in pegging momentum. I believe the market needs to sort itself out without SMU giving it any kind of extra push in one direction or another.
If you read my comments carefully you know that I have been stating the bottom of the market had been achieved shortly after the Nucor announcement. At the same time, there were still some deals to be made over the past two weeks, especially on hot rolled.
Today, I spoke with the mill with the newest operating EAF and they told me they were supporting the price increase, although not necessarily at the $700+ per ton levels suggested by some of the other steel mills.
The commercial manager of a coated mill told me earlier in the week they were not going to have any sub-$40 base prices, “…at least as our ask price. Whether people will pay it will be up to the market, but where I see it is that the market is due a true +$40 to +$50 from where it was a few weeks ago.” A few weeks ago, this mill had numbers as low as $37.50/cwt-$38.00/cwt base with the high end being around $39.00/cwt base plus extras.
Momentum can change quickly. Stay tuned to SMU to learn what is happening on the front lines as buyers and sellers square off to negotiate “true market pricing.”
A word from one of my good scrap sources earlier today: “Word is it [scrap] will go up $20 a ton across the board but sentiment alone can’t raise a market, so I have become a skeptic just today.” He added, “Export deals from the EU to Turkey are down $20 per tonne in last 48 hours.” Finishing with, “So, $20 may happen but will be short-lived.”
Canada’s Ambassador told reporters today that he is confident the Section 232 tariffs on steel and aluminum will be lifted off of Canada “in the next few weeks,” according to an article in Global News out of Canada. Wouldn’t that throw a monkey wrench into the market…?
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
Given the news about tariffs and bringing back industries to the US, a brief look back in time may show how our economy changes with technological advances and the shifting economies of scale.
Final Thoughts
We’ve talked about tariffs ad nauseam for much of the year. And I’m afraid this topic isn’t going away anytime soon. There’s a feeling that the tariff “can” will just be kicked down the road again and again, and again.
Final Thoughts
Can technology help with pig iron and DRI/HBI tariffs?
Final Thoughts
Tariff-related noise aside, there is one basic factor keeping buyers on the sidelines. Despite recent declines, HR prices remain at historically high levels. And there is no obvious support to keep them there.
Final Thoughts
United Airlines raised eyebrows earlier this month when it provided two forecasts for 2025 – one assuming a relatively stable economy and another assuming a recession. The reason? Uncertainty around the impact of President Trump’s policy shocks on the broader economy. And it sometimes feels like we’re seeing a battle between those two narratives (stable vs recession) play out within in the pages of this newsletter.