Final Thoughts

Final Thoughts

Written by John Packard

It’s Super Bowl Sunday! I will try to keep my comments short so we can all enjoy the game and worry about the steel markets in the morning.

On Thursday and Friday of this past week I was in Ponte Vedra, Fla., as I was speaking to the Steel Manufacturers Association. The SMA are the electric arc steel mills, which produce about 70 percent of the steel here in the United States.

This week I will be in Tampa acting as the master of ceremonies and moderator at the Port of Tampa Steel Conference. The event runs over two days with the presentations being made on Friday morning. The weather forecast is for 70’s which I assume is a little warmer than what you may be getting at your home this week. You can find more information about the conference by clicking here.

I read the U.S. Steel transcript and I have a few comments on what they reported. They reference inventory at service centers as being at levels that suggest 2020 buying activity should increase. According to U.S. Steel CEO Dave Burritt, “We are beginning in 2020 with the lowest month on hand to start the year since 2014….” The Steel Market Update Service Center Inventories and Shipment Analysis is seeing the numbers a little differently, and we have the distributor flat rolled inventories as being just over 3.0 months of supply at the end of December 2019 (62.9 shipping days based on December shipment rate). We have plate inventories at 3.0 months, as well, with 60.4 shipping days of inventory based on the December shipping rate.

John Packard Summit 18As our Premium level members are aware, SMU expects shipments in January to pick up and the service centers will work through some of their heightened inventories. We anticipate January levels to remain elevated. We are cautiously optimistic about pricing, and we expect steady buying on mill contracts, which are priced below spot price levels.

If you would like to learn more about our Premium products, which include our service center inventories and shipment data, our analysis of the data, and other products such as access to our survey PowerPoint presentations, please contact Paige Mayhair at 724-720-1012 or by email at

Going back to the U.S. Steel transcript, the mill announced the Big River Steel purchase continues to be the top strategic priority. The Phase 2 expansion of BRS is ahead of schedule and is on budget. SMU anticipates the expansion will melt steel in fourth-quarter 2020, perhaps as early as October or early November 2020.

There is considerable interest in the reduction of capacity being done at U.S. Steel as they idle a “significant portion of Great Lakes Works that’s planned to begin in the second quarter.” The mill also discussed a 48-day outage at their #4 blast furnace at Gary Works scheduled to begin in April of this year. Based on AIST data, the #4 blast furnace is the second largest at Gary Works (behind #14) and it produces approximately 4,200 tons of pig iron per day, which is then fed to the BOF to make steel. A 48-day outage affects about 200,000 tons of pig iron production.

USS will build inventories prior to the outage on #4 to minimize any disruption to their customers. They do not plan on any outages during the first quarter of 2020.

I also spent time this weekend reading the SDI transcript to see what I could glean from it – especially as it relates to new capacity being added, and when it will be operational.

Mark Millett, CEO for Steel Dynamics, reported construction has begun with the expectation of operations starting in mid-year 2021. The Sinton, Texas, steel mill will be rated to produce 3.0 million net tons of flat rolled once fully operational.

Fourth-quarter 2019 flat rolled shipments out of SDI included 838,000 tons of hot rolled and HRPO, 167,000 tons of cold rolled and 911,000 tons of coated. Millett reported the former Heartland conversion mill shipped 500,000-plus tons, which is 60 percent of their 800,000-ton planned run rate. SDI plans to increase the utilization rate to 90 percent during 2020.

The SDI CEO also reported that 800,000 tons of local steel processing and consumption will be located on site at the Sinton mill.

Millett spoke of the third galvanizing line being built at their Columbus plant, which will begin operations in mid-2020. This line will be able to produce 400,000 tons per year.

He also was very optimistic about both the construction and automotive markets, which represent 70 percent of steel consumption. Millett told the analysts that 13-15 percent of the mill’s sales are into the automotive market.

SMU will begin our early February flat rolled and plate steel market trends survey at 8 a.m. ET on Monday. If you receive an invitation, please answer the first question at the end of the email invite and you will be off to the races. If you would like to be added to the invite list, please send a note to:

Above I mentioned our service center inventories and shipment analysis. We produce more data than what was provided above. However, that data is for the distributors who participate on a monthly basis. If you are a flat rolled or plate distributor and you would like to learn more about the data being collected and shared with the data providers, please contact us at or you can reach out to Estelle Tran at 724-759-7876.

Registration is open for the March 31-April 1, 2020, SMU Steel 101: Introduction to Steel Making and Market Fundamentals workshop. The workshop will be held in Merrillville, Ind., which is just outside of Chicago, and will include a tour of the NLMK Portage steel mill. You can find more details about the program, venue, costs to attend and how to register on our website:

We are also taking registrations for our Aug. 24-26 SMU Steel Summit Conference which will be held at the Georgia International Convention Center next to the Atlanta International Airport (ATL). This will be our 10th conference and we expect a record number of executives from manufacturing, distributors, mills, trading companies, toll processors, logistics companies and others who service the industry. We will have a record number of exhibitors, and we will have the most interesting, entertaining and valuable program of any steel conference in North America during this calendar year. We have expanded both ends of the program with two “Pre-Summit” programs starting at 10:00 a.m. on Monday and ending with a powerhouse segment on how to attract, train and maintain young people into your organization on Wednesday afternoon. We will be publishing more detailed information about our agenda in the coming days on our website. You can register by clicking here.

Following the SMU Steel Summit will be the CRU Aluminum Market Update on Thursday and Friday. Click for more information. There are discounts available to those who attend our conference and then go on to the Aluminum Summit being hosted by CRU.

New pricing is now in effect on our Executive and Premium newsletters. You can renew, upgrade and become a new subscriber by contacting Paige Mayhair at or by phone at 724-720-1012.

Enjoy the Super Bowl.

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

John Packard, President & CEO



Latest in Final Thoughts

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.