COVID-19 cases appear to be surging again, and we asked steel buyers to advise if they were seeing any changes to their business due to the new cases. Most reported no impact from the virus, but there were concerns about what government might do if cases continue to rise. No one wants another shutdown of the economy.
Here is what one service center had to say on whether COVID would undermine the progress their company has made, “Only if regions are forced to make draconian shut-down moves. This seems unlikely as they can still make moves to lock down areas like bars, restaurants, and similar, vs. industrial type businesses. Unless industrial businesses experience an unmanageable level of infections, it seems much less likely that widespread shutdowns will reoccur.”
I have heard from buyers that interest in foreign light gauge galvanized and Galvalume has been growing and orders are being placed. When it comes to other products, the comments are more of a warning to the steel mills not to push prices too much higher. “If domestic prices add another $60-80/ton, and it appears sustainable, then imports could become a factor. Shorter term, it’s possible that Canada and Mexico could become attractive alternatives into the U.S. and that could occur faster, without the lag time and tariff implications for non-NAFTA countries,” said one service center executive. Another executive I spoke with today made a similar observation, only he put the number at $40-50 per ton before he would begin considering foreign steel as an option.
An end user in the Southwest told us they were actively buying foreign tons including 1,600 tons of HR out of Korea at $29.50/cwt DDP for February 2021 arrival. This buyer told us that in general they were not seeing many import offers and, “Mexico’s out of the picture.”
Bob Miller, CEO of NLMK USA, gave SMU a brief comment regarding the status of the negotiations between the company and their Farrell, Pa., union. “The company continues to negotiate with the USW Local 1016. The company has released much information for the benefit of the workers but also the general public showing the fair offer that has been made relative to wages and benefits. The union’s offers have not amounted to much change from their original position. We remain far apart.”
The union’s complaint is that the company is offering only a high deductible health insurance option, which the workers of USW Local 1016-03 are unwilling to accept. The NLMK USA Farrell plant has been on strike since Aug. 22.
Miller went on to discuss the operations of the Farrell steel mill, “The company has been running the operations with management employees and has shown steady improvement in all areas. We continue to work hard to get our valuable customers the steel supply they entrusted to us.”
In a couple of weeks, SMU will be unveiling three new workshops on hedging price risks utilizing the futures markets on hot rolled coil (HRC) and galvanized coil. It is our intention to have an introduction to hedging/futures markets, an advanced workshop on managing price risk and a short workshop on the new galvanized futures trading on the CME exchange. We hope to have more details to share in a week or two.
We just completed our first virtual Steel 101: Introduction to Steel Making & Market Fundamentals workshop. Our next Steel 101 workshop will be held virtually on Dec. 8-9, 2020. Registration is now open. You can click here to learn more or to register.
Our next SMU Community Chat Webinar (free) will be held next Wednesday, Oct. 28, when I will share the Zoom webinar with Dr. David Schultz. Dr. Schultz is an elections expert, and he will have some interesting perspectives (not politically motivated) having looked at the polling data down to the precinct levels in key states. You can join us by clicking here to register or going to www.SteelMarketUpdate.com/blog/smu-community-chat-webinars
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
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