There is much to discuss, much to learn…
As trade attorney Lewis Leibowitz lays out in his article/opinion piece this evening, there are no easy solutions to issues built over decades. International manufacturing companies need to review their supply chains to ensure they are not doing business in countries potentially hostile to the United States. Steel mills are balancing supply against demand. Steel buyers are rethinking their sourcing strategies.
During a “normal” economy, the U.S. steel mills do not produce enough steel to satisfy domestic consumption. Even Barry Zekelman admitted that in the SMU Community Chat webinar we held with him a couple of weeks back. There are new mills under construction, but at the same time it appears old mills are going to be phased out.
One question that we will address during the 2020 SMU Virtual Steel Summit Conference is: Will the mills be able to balance supply with true demand, including items that are not being produced in the U.S. right now?
You will hear answers to that question and many more during this year’s SMU Virtual Steel Summit Conference. You can register for the event by clicking here.
We produced our SMU Service Center Inventories & Shipments “Flash” report for data providers last week. We will produce our full report for data providers and for Premium members shortly thereafter. If you are a service center and would like to participate (confidential basis), please contact Estelle.Tran@crugroup.com or John Packard at John@SteelMarketUpdate.com. If you would like to upgrade your membership to Premium, please contact Paige Mayhair at Paige@SteelMarketUpdate.com or 724-720-1012.
We are conducting one of our SMU flat rolled and plate steel market trends surveys this week. Look for your invitation in your email inbox at 8 AM ET on Monday. If you would like to participate in our surveys, please send a note to: Brett@SteelMarketUpdate.com
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John PackardRead more from John Packard
Latest in Final Thoughts
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.
Sheet prices have fallen again this week on shorter lead times, higher imports, and potentially higher inventories. (We’ll see for sure when we release our service center shipment and inventory data next week.) I remember reporting almost exactly the same thing about a month ago and getting a fair amount of pushback. Not so much these days.