John Packard is taking some time off…
By most readings of the government guidelines, steel is considered an “essential” industry during this virus crisis. Mills that produce steel products, and by extension service centers that distribute them, are critical to getting the economy back on track. For some steel-consuming sectors, however, their “essentialness” may be open to interpretation. Steel suppliers and steel users need to stick together to make sure decision-makers on the state and local levels understand all the essential functions provided by our collective industry.
The U.S. Department of Homeland Security and the Cybersecurity and Infrastructure Security Agency (CISA) have posted guidelines identifying essential businesses and essential workers at www.cisa.gov/coronavirus.
Visitors to the CISA site will find that Primary Metal Manufacturing is considered part of the Critical Manufacturing Sector, along with Machinery Manufacturing; Electrical Equipment, Appliance and Component Manufacturing; and Transportation Equipment Manufacturing. Metals processing and distribution are essential parts of that supply chain. Steel and steel parts are critical to the continued functioning of transportation, energy, infrastructure, defense and certain types of manufacturing. Steel goes into medical construction, hospital beds, surgical instruments, respirators and other equipment needed to treat the growing number of coronavirus patients. Don’t let any bureaucrat tell you your company needs to shut down,
Another good source of information on the coronavirus is the American Iron and Steel Institute’s Resources for Coronavirus/COVID-19 page, which includes articles and links to various agencies across the country.
Many workers are fortunate to be employed in an essential industry like steel. Some, however, have received the unfortunate news that they are being laid off as their companies cut back due to canceled orders and lost sales. See “Steel Cancellations the Order of the Day” elsewhere in this issue for service center executives’ comments on the state of their businesses.
CISA’s list of essential workers actually dates back more than a decade to the President’s National Infrastructure Advisory Council in 2007 which was considering how to react to a different but similar threat.
This November 2005 comment by Department of Health and Human Services Secretary Michael Leavitt was certainly prescient: “Some will say this discussion of the Avian Flu is an overreaction. Some may say, ‘Did we cry wolf?’ The reality is if the H5N1 virus does not trigger pandemic flu, there will be another virus that will.”
Fully employed or not, we all have one truly essential job—to do our part to stem the spread of today’s virus.
Steel Market Update is still accepting registrations for the 2020 SMU Steel Summit, set for Aug. 24-26 in Atlanta, which has not been canceled. You can register by clicking here or by going to www.SteelMarketUpdate.com/Events/Steel-Summit.
As always, your business is truly appreciated by all of us here at Steel Market Update.
Tim Triplett, Executive Editor
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Domestic prices have been sliding since the beginning of the year, and I don’t see any obvious reasons why the slide might stop this week. But let’s put the timing of a bottom aside for a minute. The question among some of you seems to be whether we’ll see another price spike, or at least a “dead-cat bounce,” before the typical summer doldrums kick in.
I’ve had discussions with some of you lately about where and when sheet prices might bottom. Some of you say that hot-rolled (HR) coil prices won’t fall below $800 per short ton (st). Others tell me that bigger buyers aren’t interested unless they can get something that starts with a six. Obviously a lot depends on whether we're talking 50 tons or 50,000 tons. I've even gotten some guff about how the drop in US prices is happening only because we’re talking about it happening.
We’ve all heard a lot about mill “discipline” following a wave of consolidation over the last few years. That discipline is often evident when prices are rising, less so when they are falling. I remember hearing earlier this year that mills weren’t going to let hot-rolled (HR) coil prices fall below $1,000 per short ton (st). Then not below $900/st. Now, some of you tell me that HR prices in the mid/high-$800s are the “1-800 price” – widely available to regular spot buyers. So what comes next, and will mills “hold the line” in the $800s?
Everyone knows the old saying that “a picture is worth a thousand words.” Just because it’s a cliché doesn’t mean that it’s wrong. A lot of inked has been spilled trying to figure out why prices are falling now. I thought it might be as simple as this: Market dynamics in the fourth quarter (UAW strike, companies buying ahead of an anticipated post-strike price spike, etc.) pulled forward restocking activity that typically happens in the first quarter.
What a difference a month makes. There are a few full bulls left in the room, but their numbers are dwindling. We’ll release results of our full steel market survey tomorrow afternoon. I took a sneak peak at the data on Thursday. And more people than I expected think that US hot-rolled (HR) coil prices will be in the $700s per short ton (st) two months from now. Vanishingly few think prices will be above $1,000/st in mid-April.