Final Thoughts
Final Thoughts
Written by John Packard
June 17, 2019
I have been in New York City where one of the competitors of Steel Market Update was conducting a steel conference. There were a number of satellite mini-conferences surrounding the NYC event. I attended three of them: the CRU Steel Briefing, which attracted about 100-150 executives; the Bank of America Merrill Lynch dinner drawing a combination of investors, steel people, scrap execs and yours truly; and a private lunch hosted this afternoon by a manufacturing company with steel traders, futures brokers, a service center, analyst and me.
The biggest question was, what will it take for prices to bottom? In my opinion, it will be sooner than what I heard from various sources over the past couple of days. My opinion is driven by what we are seeing in our service center spot survey, inventories (not quite there, but moving lower), future foreign orders almost non-existent and mills getting close to marginal cost. I believe we will see an attempt to stabilize pricing in the form of a price increase announcement within the next few weeks. Whether it results in a dead cat bounce or takes hold (or fails), I do not know. However, we are asking our survey respondents to weigh in and provide their opinions. We will report on those results in Thursday’s SMU newsletter.
I overhead an executive of a scrap company talking about July commitments taken from a mill at down $20 from the June numbers. I can’t comment as to what mill and if this will be universal come July, (but you should use the information as what is possible/probable, and that it could go lower than that).
As I mentioned in a previous article, the scrap dealers think it will bottom in July.
The SMU Steel Summit Conference was one of the topics of conversation here in New York. I think you will see a bigger presence by the financial community as they are beginning to realize ATL is where all the steel executives are going to network and to discuss what will happen with supply and demand as they prepare for 2020. You can learn more about our conference on our website: www.SteelMarketUpdate.com
Our next Steel 101 workshop will be Oct. 8-9, 2019. We will be touring the Nucor Gallatin mill (and their brand new galvanizing line, which will begin running in a few weeks). We are working on hotel negotiations right now and will advise as soon as we are ready to begin registrations.
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
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.
Final Thoughts
Despite some scary headlines lately (especially about Trump potentially firing Fed Chair Jerome Powell) this is not October 2008 (financial crisis) or March 2020 (onset of the pandemic). But it sure seems like we’ve taken a relatively strong economy and poured a thick sauce of uncertainty over it.