Final Thoughts
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Final Thoughts
Written by John Packard
November 11, 2019
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.
When 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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John Packard
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
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Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
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Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
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Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
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Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!