Final Thoughts
Final Thoughts
Written by John Packard
January 1, 2020
First issue of the New Year. For that matter, today is the first issue of the new decade. It will probably take awhile to get used to 2020 vs. 2019. Of course, with the political climate and it being an election year, maybe we will have 2020 ingrained in our heads sooner rather than later.
Happy New Year and Happy New Decade to all our readers. I will go out on a limb and say this decade is going to be insane as far as the steel industry is concerned. Politics, tariffs, dumping, world overcapacity, soon to be joined by U.S. overcapacity (?), new steel mills, economic cycles and, of course, the icing on the cake (so to speak) is Alan Beaulieu’s prediction of the Great Depression hitting us at the end of the decade. Ah, but first we get to go through the Roaring 20’s….
The tariff wars continue as today I am reading that President Trump is expanding the tariffs/quotas on large washing machines. I think we can anticipate more, not fewer, tariffs to come on manufactured and steel products during 2020 (my opinion).
There will be plenty to write about, plenty of reasons to keep SMU on your “must read” list, and plenty of reasons to attend our workshops and conferences. More on those a little later in my final thoughts for this evening.
On Monday, I reached out to about 30 steel buyers and a couple of commercial people at steel mills regarding the status of flat rolled and plate steel prices as we move into the New Year. I only received about a half dozen responses, and only two confirmed actual purchases being made as of this week (and those were within the window we already have on our products).
Today, I reached out again to a number of my contacts to see if anything was starting to stir in the spot markets and was essentially told to wait until early next week when we do our normal analysis in order to get a more accurate read on the market.
As I speak with steel buyers and service center executives, I am learning most companies that have CRU-indexed contracts are maximizing their tonnage buys in order to get material at the lowest price possible. With most (if not all) contacts being in the CRU-minus category, it behooves companies to purchase material $20-$50 per ton below today’s spot price.
We did collect slightly higher numbers on hot rolled over the past few days, and I anticipate (but do not promise) that the HRC number should be up $10-$20 per ton from the $570 per ton average we are posting right now.
I believe there is support for higher prices and our SMU Price Momentum Indicators are pointing toward higher prices over the next 30 days. Part of the support is coming from the expectation of higher scrap prices in January. Another part is coming from interruption in supply, such as the ArcelorMittal Indiana Harbor accident, which is affecting their #4 BOF (steel making). We are checking to see how long this BOF will be down; to date the mill has not provided any specific guidance. Looking at the photos of the pulpit, I can’t imagine it being just a matter of days (my opinion only).
We will see a bump in imports at the beginning of January as countries with quotas will once again be able to release material that is in bonded warehouses (until such time as the quota is once again complete). You will see a surge of slabs from Brazil, and possibly other products from Brazil and South Korea in particular.
Speaking of imports – and ports in general – I will be the master of ceremonies at the 2020 Port of Tampa Steel Conference. The conference will be held at the Marriott Tampa Water Street (same hotel as in the past) on Feb. 5-7 (presentations on the 7th, golf tournament and cocktail party on the 6th). Other than myself, their speakers will be: John Anton of IHS Markit, Phil Bell of the Steel Manufacturers Association, Richard Chriss of the American Institute for International Steel, Lewis Leibowitz of the Law Offices of Lewis E. Leibowitz, Jerry Parrish of the Florida Chamber of Commerce, Dave Sumoski of Nucor and Titus O’Neal, a WWE Superstar. Click here for more details and to register. Their website is saying the conference cost is $250 per person.
Next week I will be in Ontario, Calif., as we conduct our first Steel 101: Introduction to Steel Making & Market Fundamentals Workshop. The workshop is sold out.
Our next Steel 101 workshop will be held in Merrillville, Ind., on March 31 and April 1, 2020, and will include a tour of the NLMK Portage steel mill. We should have registration available by early next week. If you would like more information, send an email to: Events@SteelMarketUpdate.com
Registration is already open (and we are closing in on 100 executives already registered) for the 2020 SMU Steel Summit Conference which will be held in Atlanta at the Georgia International Convention Center on Aug. 24-26. The conference agenda is coming together very nicely, and we will have an interesting collection of top-notch industry, economic and market segment speakers, along with a high profile special keynote speaker, to discuss the political situation and impacts on the economy after lunch on Wednesday, Aug. 26. We will be sending out more details in the weeks and months ahead. You can register (and get the links to the hotels) by clicking here. Costs are the same as 2019 at $1,375 per person with discounts for SMU/CRU subscribers, and a separate discount for companies bringing more than one person.
If you have friends in the industry who are not aware of Steel Market Update, our newsletters (Executive and Premium), our workshops and our conference, please feel free to forward them one of our newsletters or send them to our website: www.SteelMarketUpdate.com. Just like you, we need new customers to grow and spread the word.
If you would like information about upgrading your Executive level membership to Premium, if you would like to renew your existing membership, or if you are new and would like to learn more about subscribing to our services – please contact Paige Mayhair at 724-720-1012 or Paige@SteelMarketUpdate.com and she will be happy to assist you.
I, of course, am available to speak with you as well. You can reach out to me via email at John@SteelMarketUpdate.com
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
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?
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.
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.
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).
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!