Final Thoughts
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/d674450b5128942e13392d8a0dd3ec03.jpg)
Final Thoughts
Written by Tim Triplett
January 6, 2020
John Packard is traveling….
As always, the holiday break put the brakes on buying, making it a challenge to gauge steel prices in the first week of 2020. But it appears the upward price momentum has continued into the New Year.
Steel Market Update’s survey of the market over the past two days shows flat rolled steel prices up another $10-20 a ton. Multiple buyers tell SMU we can expect another $40 price increase announcement, probably led by Nucor, as soon as tomorrow (Wednesday).
Judging by comments from various steel buyers, views are mixed on the prospects for higher prices in the first quarter:
• “I believe the elements for a rising price market are falling into place. Nearly all of the factors affecting prices are bullish; lower recent imports, longer lead times, stable inventories and higher input costs all support higher prices. Then we have the unplanned outages at both USS and AM, which will put further constraints on supply. With the announcement by USS to shut down steelmaking at Great Lakes by April 1, this creates forward supply pressure, as well. Where will those lost tons go? Unless there’s a surprise to the downside for demand, I think we’re on the cusp of a market with the potential to keep rising for the near-term.”
• “Scrap should be up at least $30 a ton. Coupled with some production issues at AM, that should result in further price increases this month.”
• “I believe the expected increase in scrap, once it settles this week, will help firm up the $600 per ton minimum for hot rolled ($300 for scrap/$600 for HRC). I expect another increase to be announced soon once everyone’s lead times move into March.”
• “It does appear more clearly now that this market has some legs, based on planned/unplanned outages and capacity being taken out of the market. Prior to the holidays, I felt we would see price deterioration by late January. Now it looks like it will be very late Q1 before we see any cracks in the pricing. I think this market will test $625 before falling back to the $575 range in Q2. With an election year, geopolitical events, trade wars and tariffs, there’s always room for a surprise or two.”
Not all the service center and OEM executives responding to SMU were as bullish on pricing:
• “Lead times range from early March to just three weeks from now. It’s a real mixed bag depending on the region. We feel certain we will see another increase announced in the next 10 days or so, purely based on scrap going up. But the next increase announcement could hurt more than it helps. We are pushing up against that $600 HR number, and I think we will see growing resistance.”
• “The mills are trying to give a drifting market direction, but I’m skeptical it can last. It feels like we are in the giddy part of the mini-cycle and orders will slow from here.”
• “I don’t think they will be able to move prices higher. I think they have already run out of runway. I can’t see that being a logical move if and until someone takes out more capacity. Ultimately, the answer to that question will determine whether they can keep prices at the current level.”
John Packard is conducting the latest sold-out Steel 101 workshop today in conjunction with California Steel Industries in Ontario, Calif. The next opportunity to take advantage of SMU’s popular Steel 101 program will be in Merrillville, Ind., on March 31 and April 1, including two days of instruction and a tour of the NLMK Portage steel mill. For more information about registration, send an email to: Events@SteelMarketUpdate.com
Registration is also open for the 2020 SMU Steel Summit Conference to be held at the Georgia International Convention Center in Atlanta on Aug. 24-26.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/tim-triplett.jpeg)
Tim Triplett
Read more from Tim TriplettLatest in Final Thoughts
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
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?
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
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.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
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.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
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).
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/11/SMU-Steel-Summit.png)
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!