Final Thoughts

Final Thoughts

Written by John Packard

As flat rolled steel prices move higher, we need to remember that prior to the price increases there was an abnormally large spread between hot rolled based prices and those of cold rolled and coated. Instead of being $100-$140 per ton, they had been running as high as $180-$200 per ton. The spread was created due to a weak hot rolled market. From my perspective, it appears the HRC market is moving higher and shrinking the price premium being charged for CR and GI/AZ products. Again, from my perspective, this is a good thing and healthy for the market.

John Packard SMU Summit 2017When looking at imports for the month of October, you will see a jump. This should be expected due to October being the beginning of the fourth quarter and the first month more imports can come in from those countries with quotas (especially slabs from Brazil). It is interesting to note that even though there is a surge in slabs (semi-finished if you are looking at the government import license data), they are not as high as they were in January, April and July of this year. Some of the slabs appear to be coming in during the month of November from Brazil based on the data. I would expect slab imports in December to be minimal.

Regarding pricing for this week, we are seeing higher offers out of the domestic steel mills. The question is where are transactions at this point? In the responses that we got from our data providers today (not a survey, direct contacts), we found hot rolled prices are leaning heavily toward $520. On cold rolled and coated, we found a wider spread. So, we reached out to a couple of mills where I have a relationship, and we feel there are mills that are sitting and waiting. (We heard this from at least one service center in a phone call late this afternoon as well.) It is my belief the CR number at $690 is accurate for this week, but I believe the offers are above that number – closer to $700+. On galvanized, we are getting a wide range with one end-user putting his numbers in the very low 30’s for December orders. (However, I do not count his program with his supplier as being truly germane to the broader spot market.) Most of the coated numbers were in the $34-$36 range. On Galvalume, we had a tight spread at $35-$36. I am aware of offers out there on AZ at $37.00/cwt. I just can’t confirm orders are being taken at the higher number based on the data we collected this week.

The SMU Price Momentum Indicator on flat rolled continues to be Higher as I expect prices to rise over the next 30 days. I am considering what to do with plate momentum and will work on that over the next couple of days to see if we need to make a change. Currently, plate momentum is at Neutral.

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

John Packard, President & CEO

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Final thoughts

What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.