Final Thoughts
Final Thoughts
Written by John Packard
November 11, 2020
The SMU Steel Price Momentum Indicators on all flat rolled and plate steel products are currently pointing toward higher prices over the next 30 days. We expect hot rolled, cold rolled, galvanized, Galvalume and steel plate pricing to increase during the coming weeks. The two major reasons for our position are the limitations of supply due to restricted production at the integrated steel mills, a lack of slabs due to restrictions on Brazil imports by the Trump administration, a strike at NLMK USA’s Farrell, Pa., plant, a hack of the computer systems at Stelco in Canada along with an inability of the domestic service centers to build inventories.
Earlier this month, Steel Market Update provided our service center data providers our “Flash” report on service center inventories and shipments. In it we calculated flat rolled inventories as heading toward 1.83 months of supply (final report will be out late this week). This is quite concerning when lead times are over seven weeks for many (if not all) flat rolled products.
On-order sheet volumes are easing back, based on our proprietary service center inventories analysis. We believe this is being caused by the domestic mills (EAF mills) not yet opening their January order books (or being sold out). Based on our “Flash” analysis from earlier this month, service centers had 32.9 shipping days of supply on order at the end of October. This is down from 42.7 days at the end of September. This is putting pressure on pricing.
We will have our complete service center analysis for October finished later this week. This report will then go to data providers and then Premium subscribers to Steel Market Update. If you are a service center/wholesaler and would like information on how to become a confidential data provider, please contact Estelle.Tran@crugroup.com or myself at John@SteelMarketUpdate.com
If you would like information about becoming a Premium member, please contact Paige@SteelMarketUpdate.com
We do expect a few events to help temper this market later this year or early next year. The first is the start-up of the new EAF at Big River Steel. This will essentially double the tonnage off the BRS mill by sometime during first-quarter 2021. Second, we anticipate an end to the NLMK USA strike (timeframe is, however, an unknown). Third, slabs will be released from Brazil in early 1Q 2021. This will help California Steel, NLMK USA, AMNS Calvert and others. We anticipate Stelco will solve their computer hack issues and be back into full production soon (see article in tonight’s issue above).
The other question is on demand, and we will be working on that in greater detail over the coming days.
A reminder our next Steel 101: Introduction to Steel Making & Market Fundamentals Workshop will be held on Dec. 8-9, 2020. You can learn more about the workshop agenda, instructors (including me), costs as well as how to register by clicking here.
Tampa Steel Conference will be held on Feb. 2, 2021, and will be presented by Steel Market Update and hosted by Port Tampa Bay. This year the conference will be virtual (we hope for the first and only time). We are adding a tremendous amount of value this year by expanding the agenda to include a full day’s worth of speakers. We will focus on trade, logistics and the economy. This will be a good conference to attend, and at a very reasonable price of $150 per person (full price) with past Tampa Steel Conference attendees getting a 50 percent discount ($75) and SMU/CRU member companies getting discounts of $25 each for being a member company and bringing more than one person. The registration page should be up and running sometime on Friday of this week. If you have any issues, please contact conferences@crugroup.com
With the expectation that most Americans will have access to a viable COVID-19 vaccine by mid-year 2021, it is our intention to hold the SMU Steel Summit Conference in Atlanta on Aug. 23-25, 2021. It will be at the Georgia International Convention Center as it has been for many years now. We will have more details on the conference prior to the end of the year. However, you should block your schedules and put monies into the budget for next year’s Steel Event of the Year – the 2021 SMU Steel Summit Conference.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
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