Every other week Steel Market Update conducts an analysis of the flat rolled and plate steel market trends. This is done via a comprehensive questionnaire, invitations for which are sent to more than 600 individuals representing more than 550 companies. We intentionally weight the invitations heavily to individuals from manufacturing and steel service centers. Combined they represented 80 percent of the responses made in last week’s survey (40 percent for each). The balance of the responses came from steel mills (7 percent), trading companies (8 percent), toll processors (4 percent) and other suppliers to the industry (1 percent).
We asked questions on a myriad of topics including current and future sentiment, mill lead times, mill negotiations, steel pricing, demand, service center spot prices, trading company and steel mill related items and much more.
We concluded last week’s analysis on Thursday. One of the questions concerned where steel buyers think steel prices will move over the next 60 days. Fifty-three percent of the the buyers and sellers of steel who responded believe prices will stall at current levels. We found 37 percent are of the opinion prices will continue to rise, while only 10 percent felt prices will slide from here.
It has been some time since SMU inquired as to the strength of President Trump’s support amongst the steel community. With all that has happened since the beginning of the year, we were curious to see if the president’s support levels had tapered off. What we found is the president continues to have a large portion of the steel community on his side. We found 62 percent of our respondents are supporting Donald Trump for a second term. Joe Biden only garnered 12 percent, while 22 percent did not yet know who they were going to support and 4 percent responded “other.”
During our conference, which is being held the same time as the Republican National Convention in Jacksonville, Fla., we will check again to see if the president’s support remains or if the race tightens.
Our survey also asked service centers if they were having difficulties passing along the new higher prices (due to mill price increases) to their customers. We have been asking this question ever since the mills began attempting to move prices higher, and as you can see by the graphic below we are getting similar results, which does not play well for higher mill prices for too much longer.
All the data provided from last week’s flat rolled and plate steel trends analysis is available to our Premium members. You can learn more about upgrading to Premium by contacting Paige Mayhair at 724-720-1012 or Paige@SteelMarketUpdate.com
Now I want to take the liberty of being a proud father to my musician son. My son is a percussionist with a degree from Oberlin Conservatory and a masters from McGill in Montreal. He performs and composes contemporary music and jazz. One of his jazz records, “The Early Bird Gets,” was recently written up as the best new jazz album by the Sydney Morning Herald. You can read their review by clicking here. You will need to scroll past the Lady Ga-Ga review of her album (which at 3.5 stars was rated lower than my son’s at 4.5 stars…).
If you would like to listen to Ryan Packard’s music, which is a collaboration with saxophonist Dave Rempis and bass player Brandon Lopez, you can click here.
This Wednesday at 11 a.m. ET the SMU Community Chat webinar will host Donald Bly of Applied Value. Applied Value is a company that works with buy side customers, thus giving them insights into how OEMs are reacting to today’s market, price negotiations and on subjects such as reshoring. I think you will find his insights interesting and potentially helpful to your business. You can click here to register for the free webinar.
As always, your business is truly appreciated by all of us here 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.