Final Thoughts
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/dcea694be9a48f6af4b11da968ba00fb.jpg)
Final Thoughts
Written by Tim Triplett
August 12, 2020
Seventy percent of the steel buyers polled by SMU last week said they believe prices are near the bottom of the current market. SMU pegs the current benchmark price for hot rolled at around $440 per ton, slightly lower than the consensus view of $460 per ton because SMU learned of some low-$400’s deals late last week. The $40 per ton price increase announced by the integrated mills on July 21 fell flat when the EAF mills decided not to follow suit. Now, a few weeks later, some buyers expect it will be the minimills taking the lead on the next price increase. Others have expressed doubts that steel demand has recovered enough yet for a price hike to succeed.
Here’s a few comments from some wise steel executives:
“I believe a price increase by the minimills will be accepted. Demand is improving in lots of industries. Consumer spending is on the increase. Scrap will move higher in September. Iron ore is very high, so the integrated mills have to keep pushing prices higher. Knowing that, the mini’s will lead the way.”
“We expect the minimills to attempt an increase, but there isn’t much room to run, as a lot of idled capacity has come back online. Lead times for cold rolled and coated steel will extend into the fourth quarter, and I don’t think many players will be interested in major stock buys. Furthermore, a lot of contract tons will continue to ship out in September at historically low pricing levels. Those who don’t need spot may be content to rely on contract tons.”
“We’re seeing some increase off of the recent lows and some firming for the hot rolled base to get to $450 and then $460-470. The chance for further erosion seems low. Base prices should follow where the scrap price leads in September and beyond. Scrap prices are expected to rise, according to normal seasonality this fall. Given the strength in the export market for scrap, that should be a no-brainer.”
“I think the upside for sheet pricing will likely be limited and we won’t see sizable increases. We’re seeing a return by the mills of using non-base factors as discount mechanisms in order to ‘protect’ or increase the base price. Freight, grade extras, size extras, etc., are being discounted as an incentive to generate orders, while technically using a higher base price.”
On another subject, Steel Market Update’s Steel Buyers Sentiment Indexes had been improving steadily since hitting bottom in early April, but backtracked last month, possibly reflecting steel buyers’ frustration over the slow progress of recovery.
The Current Sentiment reading in the survey taken the week of Aug. 3 stayed at +34, the same as the prior week and down 8 points from the first week of July. Likewise, SMU’s Future Sentiment Index was unchanged at a reading of +38. That’s down 14 points from the week of July 9. For comparison, Sentiment Index readings typically were in the upper +50s and +60s in 2019 and Q1 2020 before COVID.
Looking back over the years, Future Sentiment readings are almost always significantly higher than Current Sentiment. It’s human nature to be more optimistic about the future and more pessimistic about the problems at hand. The fact that Future Sentiment, at +38, is not much more positive than Current Sentiment, at +34, may say something about how discouraged many people have become over the pandemic.
It’s not too late to register for the 2020 SMU Virtual Steel Summit Conference If you are still undecided, tune into next week’s SMU Community Chat when John Packard and the CRU crew will give everyone a tour of the “live” virtual summit platform. The webinar is free and begins at 11 a.m. ET on Wednesday.
As always, your business is truly appreciated by all of us here at Steel Market Update.
Tim Triplett, Executive Editor
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/tim-triplett.jpeg)
Tim Triplett
Read more from Tim TriplettLatest in Final Thoughts
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/11/SMU-Steel-Summit.png)
Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!