Final Thoughts
Final Thoughts
Written by John Packard
May 8, 2019
I am in Chicago having spoken to a Bank of America Merrill Lynch gathering last night, and I will be attending the Metals Industry Boy Scout Dinner this evening.
The conversations I am having here in Chicago are similar to what we have been reporting for some time now. Steel buyers are concerned and frustrated with the decline of spot prices. Service centers are reporting that their end-user customers are either “sitting on their hands” or buying to the minimums of their contracts. In some cases, the minimums being negotiated are less than the minimums promised to the service center mill suppliers. This ends up increasing inventories and may be one reason why our analysis has been showing inventories building during first-quarter 2019.
Yesterday’s presentation was given with Timna Tanners, metals and mining analyst for Bank of America Merrill Lynch. Timna, besides being a regular at our SMU Steel Summit Conference, has been making waves in the industry with her trademarked “Steelmageddon” forecast for steel prices by 2022. Her thesis is that planned capacity additions will create an oversupply situation that drives prices sharply downward. I want to point you to the first article in tonight’s issue written by Paul Lowrey of Steel Research Associates. Paul believes the new capacity is not oversupply, but rather overdue, and he explains why.
Both Timna and Paul will be on a panel at this year’s SMU Steel Summit Conference discussing the new mill capacity and what it means for the industry – both buyers and sellers – in the coming years. Joining Timna and Paul will be Lynn Lupori, head of metal consulting at CRU. This panel, combined with the mill panel we will have the day before, will be dynamite programs you will not want to miss at this year’s event.
I just added the last program, which I will describe in more detail once I have cemented in all of the panelists. But, essentially, it is going to be on how banks are looking at financing business or acquisitions based on the forecasts for 2019 that will be discussed during our conference. You may want to bring your CFO this year…
For more details about our conference and how to register: www.SteelMarketUpdate.com/Events/Steel-Summit
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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