Final Thoughts

Final Thoughts

Written by John Packard


The world is changing in nanoseconds before our eyes. Did anyone think the whole country of Italy would be restricted/quarantined a few weeks back?

Yesterday, Saudi Arabia decided to go to war with Russia over the price of oil, and voila the price drops 30 percent in one day.

The U.S. has hardly begun testing for the coronavirus (I happen to have a bad cold and my doctor did not even want to see me… never mind test me). Numbers are rising daily, but no one really knows how many are affected. The assumption is it is a lot more than what the government is reporting.

John Packard Summit 18CRU analysts did a report on what it means to the steel industry when the northern segment of Italy was under quarantine. The next day the whole country is under quarantine.

The Wall Street Journal reported on the growth of inventories at the steel mills in China. Remember we reported on this last week from a direct participant in the Chinese market. That steel will have to be dealt with (as will the mills that continue to run).

One steel executive told me this afternoon that Timna Tanners’ “Steelmageddon” theory may well become a reality sooner than originally thought. It’s still early, but something to think about.

We continue to get mixed reviews when it comes to taking the coronavirus seriously by individual companies (or more appropriately I should say single executives at specific companies). Here are two examples as to the responses received to the question, “Is the coronavirus having any impact on your company?”

A very large service center responded, “Plans to deal with the virus kicked into high gear this week. Most travel stopped, all the health protocols were put in place at facilities, running scenarios on operating partially or closed with employees working from home, etc. (mainly servicing customers/suppliers, etc.). It’s very possible that shutdowns could be on a company-by-company basis, thus we could have large disparities in impacts all over.”

Another very large service center group told us, “Big time. Travel, visits, restrictions, buy patterns, outlook and forecast, generally a much more cautious approach to the next 90 days.”

A third large service center said, “So far just emotional nonsense.”

Most of the companies responding to the coronavirus question said, “not yet.”

Oil dropping to $30 per barrel could be an even bigger deal as a prolonged price war could force many of the small independent drillers out of business. The energy sector of the economy utilizes approximately 20 percent of the steel produced in the United States. Hot rolled would be the product hit the hardest. If HRC prices slide, you can bet that cold rolled and coated steels will follow.

Right now, we are seeing strong order books at most of the steel mills. While speaking to the president of a Midwest-based steel mill, we were told that some of the steel mill order books are essentially full. Quotes on HRC are around $620 per ton, and in some cases even higher. However, this executive told SMU, “The energy sector is going to be a bloodbath. Who is going to drill at these numbers?” The expectation being HRC numbers could be negatively impacted soon.

A quick note regarding the 2020 SMU Steel Summit Conference. Registrations have exceeded 300 executives and we continue to get registrations and inquiries daily. If you have any questions about our agenda, past attendees (including video testimonials), costs and how to register, please click here.

There are a few sponsor and exhibitor spots left for this year’s conference. If you would like more information about becoming a sponsor or exhibitor, please contact Jill Waldman at Jill@SteelMarketUpdate.com or 303-570-6570.

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.