Pandemic is a public health issue, not a political issue.
I watched just a few minutes of the Senate testimony today with Dr. Fauci, Dr. Redfield of the CDC, Dr. Hahn, commissioner of the Food and Drug Administration, and Admiral Giroir, the Assistant Secretary for Health. I thought one question and answer was interesting in this political environment. Dr. Fauci told the Senators (in response to one of their questions) that neither President Trump nor President Obama have held back efforts (previous or now) to develop a vaccine for COVID-19.
Fingers crossed, we may have a vaccine by early 2021. Until then….
Well, this is what everybody is wondering. What will the economy, jobs…life…look like until we get an effective vaccine?
We have been conducting weekly “Community Chat” webinars in an effort to answers questions, or at least provide market information and data for those attending to reflect upon as you consider your steel buying and selling decisions. The webinars are free and available to anyone. You do not need to be an SMU or CRU subscriber, nor do you have to be a high-level executive to register. Please let your sales, purchasing, logistics, financial and others within your organization know they are welcome to attend. The webinars are at 11 AM ET (10 AM CT, 9 AM MT and 8 AM PT) and last no more than 45 minutes.
We have a good lineup of webinar speakers over the next few weeks.
Wednesday, May 13, we will have Dr. Chris Kuehl of Armada Corporate Intelligence chat with me as we discuss the economy and what to expect in the coming weeks and months. Dr. Kuehl has been a speaker at multiple SMU Steel Summit Conferences and his wit and wisdom are always appreciated. You can register for this webinar by clicking here.
Wednesday, May 20, we will host John Anton of IHS Markit. Anton was the first economist SMU heard speak directly to the damage COVID-19 was going to have on the world and U.S. economies. He continues to have strong opinions on the subject. Anton is also a well-known speaker at SMU Steel Summit Conferences, and he is scheduled to speak at our conference with Timna Tanners of Bank of America this year. We will have a link for registration for this conference ready by Thursday of this week.
On Wednesday, May 27, we will host Barry Zekelman who is the Chairman and CEO of Zekelman Industries – one of the largest flat rolled steel purchasers in North America. Zekelman is a strong supporter of American manufacturing. I believe he will be both informative and entertaining. Registration will not open for that webinar until the end of next week.
If there is someone you would like to see participate as a speaker in one of our webinars, or a subject that is important that we haven’t addressed, please contact me at John@SteelMarketUpdate.com
That gurgling sound you are hearing in the market is steel buyers absorbing as little of the price increases as possible, and the echo is that of the steel mills pushing for as much as they can possibly get while keeping order books solid.
I think the market still expects another round of price increases between now and the end of the month. One of the steel mills told me they believe prime scrap could go to $350 per gross ton next month (June delivery). If true, that puts further pressure on the EAF mills to move prices higher. If they (EAF mills) think that a second increase will firm $500 per ton now, then you might see a third increase come late May/early June in order to move the numbers closer to $540-$550 per ton.
As always, your business is truly appreciated by all of us at Steel Market Update.
John Packard, President & CEO
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Latest in Final Thoughts
What are some “Black Swans” to watch out for? With the war in Ukraine entering its third year, your mind might understandably move to conflicts overseas. Here is one closer to home to consider: US trade relations with Mexico taking a turn for the worse. I mention that because the Office of the United States Trade Representative (USTR) dropped a (virtual) bombshell earlier this month.
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.