Final Thoughts
Final Thoughts
Written by John Packard
July 29, 2019
Prices continued to move higher this week and the mills seem to have gotten a handle on price momentum both on flat rolled and plate. Whether this is temporary or not will depend on lead times and the ability of the steel mills to fill their order books.
As one buyer told me this morning: “Overall, lead times are out about 1.5-2 weeks from the bottom. We’ll need to see how fast September fills up, since we see a wide variation in lead times among the mills. Having said that, even if September closes sooner vs. later, I am very suspect that we’ll see the market continue higher, and a firm ceiling of $30ish is very likely. Scrap price increases should provide some support/foundation for sheet prices and may help to prevent a reversal in the near term. However, there exists a strong possibility that we see a return to weak order books for October and could see downside risk for late fall and into year-end.”
I am hearing from our readers that they are enjoying the added articles that come from the CRU analysts. Something that helps differentiate Steel Market Update from our competition.
We have been getting a slew of SMU NexGen Leadership Award nominations over the past few days. I am very impressed with the quality of the young people in this industry and I commend those companies that are recognizing and honoring their young talent by nominating them for this award. We will continue to accept nominations until the end of business on Thursday, Aug. 1.
Registration is open for the next Steel 101 workshop, which will be held in Cincinnati on Oct. 7-8 and will include a tour of the Nucor Gallatin steel mill. The workshop is about 70 percent sold at this time. For more details and information about how to register, please go to www.SteelMarketUpdate.com/Events/Steel101
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I am traveling for the balance of the week. At the end of this week I will be in Atlanta working on our opening video(s) for the 2019 SMU Steel Summit Conference. If you have not attended one of our past conferences, you may not understand that an SMU Steel Summit Conference is meant to entertain as well as to educate and to promote you and your company through networking.
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John Packard, President & CEO
John Packard
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Final Thoughts
Another day, another massive gap between the news and market sentiment. On the news side, we’ve got war in the Middle East. The devastation facing western North Carolina coming into tragic focus. And the outcome of the presidential election remains a coin toss, according to current polling.
Final thoughts
There are markets where the headlines and the prices are both crazy. This does not appear to be one of them, at least not yet.
Final thoughts
Washington loomed large in our surveys this week. Two things actually: the upcoming presidential election and the trade case against imported coated products from 10 nations.
Final thoughts
Thanks to everyone who attended our Steel Hedging 101 workshop in Chicago on Wednesday. I learned a lot from StoneX Group’s Spencer Johnson, who instructs the course, and from your good questions. One thing that Spencer said sticks with me as I write this column. Namely, that momentum drives steel prices more than other commodity markets. If you watch steel futures, you’ll see up days and down days. But it’s rare to see the momentum shifting back and forth within any given day.
Final thoughts
SMU's prices ranges for flat-rolled steel were mostly sideways on Tuesday even as futures market shot higher. I got some questions as to why hot-rolled (HR) coil futures shot higher. As best as I can tell, it might have been in response to news that China plans to roll out stimulus measures. We have details on those measures here thanks to our colleagues at CRU. The chart below gives you some idea of just how sharply upward the move in HR futures was earlier on Tuesday: