Final Thoughts

September 16, 2020

Nothing like a spike in steel prices to give the market a much needed attitude adjustment, one the mills and service centers can really use as the pandemic continues to weigh on day-to-day operations and individuals’ emotions. Steel prices have jumped by nearly $140 per ton in the last month. SMU’s Steel Buyers Sentiment Index, which measures how steel execs feel about their chances for success given the current market conditions, is back to levels prior to COVID and well above readings at this time last year.

Some folks are feeling better than others, of course. Those who stocked up in August find themselves with a big margin advantage in September. Yet almost two out of three of those responding to SMU’s questionnaire this week remain reluctant to add inventory. Here’s what a few of them had to say:

“There’s too much uncertainty as to whether this bump in demand is only temporary.”

“Mill capacity utilization is still in the low 60s, energy is flat, demand will not sustain an extended run-up in pricing.”

“This is a short-term situation not triggered by demand but by mill outages to artificially tighten supply. The only product that is really tight for the short term is Galvalume, and that will subside by early November.”

“There’s risk in getting caught with high-priced inventory when prices come down.”

“Buy only what you need. Trying to time the market leads to inventory hangovers. Plus, good luck trying to get anything additional from the mills right now.”

“My rule is 6-8 weeks of inventory. It has worked well for 26 years. No need to change now.”

On another note, the technical experts at CRU are in the process of migrating the Steel Market Update website to a new server. The server upgrade will take place on Friday and Saturday. We anticipate all will go smoothly and the changeover will be transparent to our readers. But in the event of an unexpected problem, be aware that the Sunday issue of SMU could be delayed or abbreviated in terms of the normal content. Thanks for your understanding.

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

Tim Triplett, Executive Editor