Final Thoughts

Most of the service center and manufacturing executives responding to SMU’s questionnaire this week expect steel prices to slide a bit further before finding a bottom. SMU’s latest check of the market has the benchmark price for hot rolled steel slipping to an average of $460 per ton. That’s down by $120 since March just before the virus hit.

Here are some of their comments:

“I believe prices will be on a downward ride until further notice. There’s little to no indication that EAF mills are yet willing to reduce output enough to alter the landscape, despite short 2-3 week lead-times for HR. With the outlook for scrap prices to be lower over the next two months, there will not be cost pressure on the EAF mills to raise prices. In fact, lower scrap prices will allow EAF mills to lower steel prices and maintain margins. So, I see prices continuing to weaken unless and until they get to a point where the mills cry ‘uncle.’ I think that level is $400-420/ton, and I believe we’ll get to those levels in the next 6-8 weeks. If a surge of the virus ends up overwhelming the medical capacities in some regions, more widespread shutdowns may get put in place.”

“I think we are very close to a bottom for steel prices. A resurgence of the virus will slow the recovery down and we will plateau for a longer period than expected.”

“I believe prices will slide a bit more. Quantity will dictate the base. The impact of a surge will be great, but not to the level of the first occurrence. Let’s hope we are better prepared if there is a second go around.”

“We feel prices will continue to slide modestly over the next 60 days. We are concerned about a surge. Our July shipments are down 30 percent MTD over June’s pace.”

“The bottom for HR is $450. Mingo Junction’s shutdown will immediately impact pricing [to the upside].”

“We are seeing demand rather sluggish right now and very little quoting activity. We are being very careful with our inventory at our southern plants based on new outbreaks of the coronavirus. We are now seeing cases in our facilities in the South over the past two weeks.”

“We are near or at a bottom. A surge will definitely temper the progress, but I don’t believe, and pray, we don’t get widespread shutdowns again.”  

“I believe prices will slide another $20/ton or more based on scrap and low demand levels.”

“We are assuming the slight downward trend will continue for a bit, but are hopeful HR will not go much lower. A resurgence is definitely a concern.”“We expect prices to slide a bit more, then pick back up to the $500 range. We cannot shut down again.”

“We’re not buying anything. Everything is hinged on COVID-19 resurging across the country and possibly disrupting our business again. Until we have a cure or a proven vaccine, the answers will continue to be negative.” 

SMU’s own John Packard will be the featured speaker during next Wednesday’s SMU Community Chat. The webinar, which is free to all in the industry, will begin at 11 a.m. ET on July 22. John will discuss the results of our latest flat rolled and plate market trends survey, our price indices and service center inventories/shipment data. Click here to register.

If I know John, he will also toss in a plug for the 2020 SMU Virtual Steel Summit Conference Registrations for this our first “virtual” summit are coming in at a strong pace. He’s working incredibly hard to make it a unique experience. For more information, visit www.SteelMarketUpdate.com and click on the SMU Virtual Steel Summit link. Or to register, click here.

As always, your business is truly appreciated by all of us here at Steel Market Update.

Tim Triplett, Executive Editor