Final Thoughts

Our sources began advising us of the increase announcements early this afternoon. When asked where this would put the mill’s base price on benchmark hot rolled coil, we were given a range of $500-$540 per ton by our initial contacts. Later in the afternoon, a service center buyer advised they were sitting with ArcelorMittal and the proposed base price was $520 per ton, which is $40 above the $480 per ton we had as our index average last week (this week we came in at $470 per ton as the upper end of our range had eroded a bit over the past week).

I expect every domestic mill will follow AMUSA lead. Nucor has been hinting about scrap prices going higher in their recent earnings conference calls. Higher scrap prices would be supportive for steel prices.

In tonight’s issue we wrote about the service centers being at a point of “capitulation,” meaning they would be supportive of the mill price increases. As of this writing I have not heard one steel buyer complaining about the increase as most consider the increase healthy for the industry and for the value of their inventory.

As with every price increase, we will communicate with steel buyers and the steel mills to see if some or all of the increases are being collected. The first step is to see if the steel mills allow a “grace period” for customers to place new orders at previously quoted pricing. The second indicator will be lead times and what impact those new orders have on the mill order books. If there is a bump in lead times, you can expect another increase, probably prior to Thanksgiving.

I will be traveling to London beginning on Friday afternoon as I will be visiting the CRU corporate headquarters and meeting with various department heads as we look at our strategy for SMU in the coming year.

We anticipate beginning to rollout the 2020 SMU Steel Conference by mid-November, so you can look for information in that regard in the coming weeks.

We have already determined 2020 advertising rates for our newsletter and website. If you have interest in advertising with SMU, please contact Brett Linton at 770-299-8997 or by email at Brett@SteelMarketUpdate.com

Paige Mayhair will be covering my phone and directing or answering questions you might have. She also can assist you with any information you need regarding renewing your membership, upgrading to Premium or adding new people, or becoming the newest subscriber to our services. Paige can be reached at 724-720-1012 or by email: Paige@SteelMarketUpdate.com

Also, a reminder that our SMU Steel 101 workshop registration for the Ontario, Calif., workshop is still open and we have plenty of seats available. You can find more information and register by going to www.SteelMarketUpdate.com/Events/Steel101

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

John Packard, President & CEO