Final Thoughts

Final Thoughts

Written by John Packard


There was much discussion at the NASA conference and in the wake of the conference regarding scrap pricing and where prices are headed for the month of November. The discussion on scrap has been a moving target over the past week or two. We checked with some of our sources earlier this month and we were told to expect a “firm sideways” market price in November. At the NASA meeting, there was much discussion referencing prime grades as possibly being up $30 per gross ton.

John Packard Summit 18

Today I asked a number of key scrap contacts what they were seeing and was told, “Maybe sideways or up $10 if lucky. Order books not good. The shred is the tightest. Nucor not making DRI right now because it’s cheaper to buy plentiful bush [busheling].” When told of the up $30 on primes being bantered about at the NASA conference, this same person said, “They’re dreamers. I wish they were right. But mills are not paying up $30 when HRC business is falling. That makes no sense.”

I traded messages with a steel mill executive who told me, “I believe November will be within -15 to +10 range vs. October, and that December/January shows firming. In other words, we are very near the bottom, and in winter months mills will pay up some more to account for lower supply and a modest bump of demand. I believe mills have accomplished price decreases by running their inventories down pretty low. When they restock, the scrappies will extract some $ from the mills.”

I also spoke to a couple of my contacts about pig iron prices, which have firmed at or slightly above $300/MT CFR. One pig iron expert told me, “There have been scant pig iron buys in the USA. Based on recent Chinese purchases, the USA price should be $305-$310 MT CFR, but no one has bit at this price.”

One of the reasons there is so much interest in scrap is the belief flat rolled steel prices will be pushed higher by the domestic steel mills in the next few days to weeks. This was another area of discussion at the NASA conference and I spoke directly to two steel mill executives on the subject. Both felt prices are at a bottom, however neither was willing to go out on a limb to say their company would be the price leader and make the first announcement.

I believe we are close to if not at the bottom of the market. This does not mean that we won’t see some “drift” in pricing (which we are seeing in Galvalume this week) as buyers jockey to get the lowest prices possible before any announcements are made.

During my NASA talk, I spoke to why I sold Steel Market Update to the CRU Group, which is celebrating their 50th anniversary next week in London. Besides my age and a need to make sure my family is protected, the main reason was due to my desire to build new products (such as our Service Center Inventories and Shipment Data). I wanted to work on expanding the SMU Steel Summit Conference, which was quickly outgrowing my staff’s ability to handle the logistics and to guarantee a quality experience for our attendees. I also wanted to start new conferences like the one focused on youth, which is what I am now planning for 2020. The relationship between SMU and CRU has been excellent, and we are moving ahead on many fronts to expand coverage for our customers, new products for our members and a new conference that is important for the steel and manufacturing industries as they attempt to attract high-energy, high-quality young people into those industries.

There has been much interest in our Steel 101: Introduction to Steel Making & Market Fundamentals Workshop. We have trained young people, mid-level executives and even some top executives, more than 1,000 people, since we started. The workshop provides a basic understanding of the steelmaking process for both flat and long products. We do spend more time on flat rolled since that is the focus of our publication, and because we tour a flat rolled steel mill as part of our workshop. We also want our attendees to understand what role residuals play in the quality of the steels being produced, how additives are made to steel in order to obtain the proper yield strength and elongations (formability) and we discuss how steel is bought and sold. Lastly, we discuss market forces and influences on the industry and what are some of the keys to watch. Our next workshop will be held on Jan. 7-8, 2020, in Ontario, Calif., and we will tour the California Steel Industries steel mill.

I mentioned some of our proprietary products at the beginning of my article on my Notes for NASA. Some of these products are available to our Executive level readers. Others are only available to our Premium members. If you are an Executive level subscriber, you may want to inquire about upgrading your membership to Premium. If you have a limited number of people on your membership, you may want to inquire about our Regional and Global pricing, which allows your company to have an unlimited number of employees receiving our newsletter and access to our website. For more information, please contact Paige Mayhair at 724-720-1012 or by email at: Paige@SteelMarketUpdate.com

I will be in my office on Wednesday afternoon, Thursday and Friday morning. I will be leaving for London on Friday afternoon and will not return to my office until Monday, Nov. 4.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, President & CEO     

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