Final Thoughts
Final Thoughts
Written by John Packard
January 11, 2021
The runup in steel prices continues unabated with benchmark hot rolled prices now averaging $1,080 per ton. The $1,080 number on hot rolled is the highest in our history (we reported $1,070 back in July 2008). Steel buyers should note that even as we bust through our past record high, we believe prices will still move higher from here as there is nothing immediate that will affect pricing momentum, which is clearly on the side of the steel mills.
One thing that I find interesting as we canvass steel buyers is their belief that prices cannot go much higher than where they are today. In our most recent survey, we found 48 percent of the respondents reporting prices would peak at numbers below the $1,080 per ton we reported this evening. We are already collecting data that has HRC offers out there close to $1,200 per ton ($60.00/cwt). Yet, only 23 percent of the steel buyers believe spot prices will exceed $1,100 per ton….
In discussions I have had with steel service centers, there is an issue of credit lines affecting companies’ ability to buy enough steel to keep their businesses going. When you have an established credit line of X when the price of steel was $550-$600 per ton, and then prices effectively double, the credit line is cut in half.
I am hearing both service centers and steel mills are concerned about the potential for demand destruction due to the squeeze in credit lines.
Tomorrow (Wednesday, Jan. 13) Michael Cowden and I will discuss how we are seeing the steel markets as we conduct one of our free SMU Community Chat Webinars. We are in historic times, and I thought this might be a good time to 1) introduce Michael Cowden to our community, and 2) to review what our surveys are telling us, and what we are hearing in the marketplace as we discuss steel prices, demand, supply, commodity prices and a whole host of other subjects that impact your businesses. You can register for this free webinar by clicking here or going to www.SteelMarketUpdate.com/blog/smu-community-chat-webinars
With Michael Cowden joining SMU, the number of inquiries we have been receiving requesting subscription pricing has gone up dramatically. If you are interested in joining the SMU newsletter community as a new subscriber, please contact Paige Mayhair at Paige@SteelMarketUpdate.com or by phone at 724-720-1012.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO, John@SteelMarketUpdate.com
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
Can technology help with pig iron and DRI/HBI tariffs?
Final Thoughts
Tariff-related noise aside, there is one basic factor keeping buyers on the sidelines. Despite recent declines, HR prices remain at historically high levels. And there is no obvious support to keep them there.
Final Thoughts
United Airlines raised eyebrows earlier this month when it provided two forecasts for 2025 – one assuming a relatively stable economy and another assuming a recession. The reason? Uncertainty around the impact of President Trump’s policy shocks on the broader economy. And it sometimes feels like we’re seeing a battle between those two narratives (stable vs recession) play out within in the pages of this newsletter.
Final Thoughts
Despite some scary headlines lately (especially about Trump potentially firing Fed Chair Jerome Powell) this is not October 2008 (financial crisis) or March 2020 (onset of the pandemic). But it sure seems like we’ve taken a relatively strong economy and poured a thick sauce of uncertainty over it.
Final Thoughts
I put some of our survey data through ChatGpt, with interesting results.