Steel Products Prices North America

Uncertainty Reigns as Steel Buyers Ponder What’s Next

Written by John Packard

Written by: John Packard, President & CEO, Steel Market Update

Steel prices in general appear to have weakened further for the fifth week, based on Steel Market Update’s canvass of the market over the past two days. Hindsight being 20/20, SMU arguably could have adjusted its Price Momentum Indicator from Neutral to Lower earlier than last week. But we elected to be conservative and not take any action that would influence steel prices one way or the other. We will maintain momentum as Lower until we see changes that indicate otherwise.

We are living in a world of uncertainty as can be seen by the reaction of the stock market to coronavirus fears. Steel buyers are looking at similar steel data (lead times, willingness of mills to negotiate, scrap prices for March, etc.) and are coming up with differing opinions on the direction of the market. The number of buyers predicting that prices will move higher, lower or sideways was nearly the same in SMU’s latest poll, which illustrates how difficult it is to forecast given the current, confusing market conditions.

With all the uncertainty in the market, and with new scrap prices due out early in March, we are of the opinion that steel buyers should remain cautious and stay in tune with their inventories and the lead times associated with the products they buy.

Here are some of the comments we got from steel buyers over the past two days:

“I think prices will move higher. With lead times, at least at several mills, and scrap poised to rise, it opens a window for increases. A check on this would be imports, but one could not realistically expect delivery until the June or even July time-frame from many sources.”  Service Center

“Lead times are still solid. With scrap going up and lead times strong, I feel pricing will hold firm through March.” Service Center

“We’re starting to see a little reluctancy from the mills to offer aggressive spot pricing, especially on galvanized. Would not be surprised to see a mill announcement next week, though I believe it is a little premature.” Service Center

“HR lead times are moving out. We expect an increase announcement soon. Prices will temporarily maintain current levels.” Service Center

“Due to the market’s uncertainty, the only luxury at our disposal would be mill lead times. We’ll ride this train while we can. Lead times continue to push out and we are now close to May. The China coronavirus seems to be at the forefront of today’s news. What will the impact truly be?” Service Center

“Things are firmer since last Monday. Hickman and BRS seem to have gotten some HRC business.” Service Center

“Lead times are moving out to April on most products. We expect prices to move sideways, which is better than it looked two weeks ago. I’m taking the price increase rumors seriously.” Service Center

“Nucor’s pushing HR lead times out due to a large pipe grade order, I am told. All mills in the South except for BR have lead times of April. BR is the fourth week of March. I actually expect prices to move higher, not lower, as SMU is predicting. Lead times continue to push out; HR and galv are strong. CR is the weak link with mills offering discounts to increase volumes. Construction is solid in relation to last year, especially in the South. However, weak auto and energy sectors do provide some down movement risk if they don’t pick up.” End User

“Prices will move down to sideways; $520 is bottom.” Service Center

“The market is going to need to digest today’s hard pullback [stock market] and understand the impact.” End user

“Lead times are getting shorter for galv at some mills such as USS.” Service Center

“Lead times appear to be mostly sideways from what I can gather this week. Pricing is sideways to lower. Scrap for March is pointing to a roll or possible increase. The coronavirus and the current economic fallout are throwing huge uncertainty for every market. If we continue to see the equity market sell-off, it will quickly impact business sentiment, and at the least will lead to near-term stagnation/freeze as companies and people wait to see what the outcomes look like. It’s impossible to predict at this moment whether this will be a significant factor or not. The market (writ large) hates uncertainty, and I can’t think of anything in recent memory that has as much uncertainty tied to it as this virus does at this time.” Service Center

Plate Comments

“Mills are at six weeks. Mittal booked some pipe and they are the longest cycle time, maybe seven weeks except for the 110-inch mill at BH, which should never have restarted and should be closed immediately. Prices are flat and margins nonexistent. It’s going to be another tough year for plate SCs. Time to think about M&A and exiting the plate SC segment. Mills continuing to grow market share by consuming more of what used to be SC’s market.” Service Center

“Lead times are the same at four weeks for light plate, eight weeks for medium size and 12 weeks for heavy plate. We expect plate to be lower. When the mills raised plate pricing $400 a ton in 2018, it set manufacturing back two years.” Service Center

“Lead times have been basically the same. I see prices down $20 for 30-60 days, then possibly up $40 by May-June.” Service Center

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