Final Thoughts
Final Thoughts
Written by Tim Triplett
January 27, 2021
It’s impossible to know what the future holds for the steel market in 2021, but our immediate prospects are less uncertain simply because we have a new president. At least we know who will be calling the shots for the next four years. That should help companies anticipate Biden’s major policy decisions—like them or not—so they can plan accordingly.
Will the economy and steel demand get a post-election boost? Service center and manufacturing executives who responded to Steel Market Update’s questionnaire this week are split on the subject:
• “I think capital expenditures in North America will improve this year because there is now some predictability in trade and the economy.”
• “If he puts another $1.9 trillion into the economy, everything will go up.”
• “I expect 2021 to be a great year for our company. Demand is strong—as long as we can find steel.”
• “Demand has been strong and we expect that to continue. We see the economy continuing to recover.”
• “I don’t see the change in administration making an appreciable difference.”
• “Do I expect the economy and steel demand to get a boost? Not in 2021.”
• “As long as the administration continues to pump money into the hands of U.S. citizens and the interest rates remain low, I expect business will continue to be strong. Unfortunately, I’m not sure the long-term printing of money is in the best interest of our economy. A subsidized economy, for lack of a better term, cannot sustain itself. I hope that’s not the long-term plan of our politicians.”
Closer to home, the steel industry is on pins and needles trying to predict when the historic runup in steel prices will finally come to an end. SMU’s survey also asked readers where they believe hot rolled prices will peak. Their guesses ranged from $1,150 to $1,250 per ton, with the most common response at $1,200. That’s a mere $60 from the current price of $1,140, based on SMU’s check of the market this week. Steel prices have seen $60 swings in a single week in recent months, though lately the increases have been more modest. SMU’s Price Momentum Indicators continue to point toward higher prices for steel products over the next 30 days, but that momentum appears to be waning. Said one service center exec: “I think scrap prices easing in February will help slow the momentum. My gut tells me we are close.” Commented another with the opposite opinion: “Scrap dropping slightly will put a damper on some of the upward pressure, but I highly doubt prices will head lower anytime in the next couple of months.”
Points out another wise industry veteran, just because prices peak does not mean they will plunge. “We may see prices stabilize, but that may not occur until we see more widespread increases in mill spot availability first. Until there’s agreement that sheet buyers have been able to fulfill most of their needs, there’s still going to be some upward momentum. There’s only one remaining blast furnace left that could be restarted (USS GC), so there’s not an expectation for any sizable increase in domestic output in 1H 21. On top of that, many mills will have to take outages in 2Q after running their equipment through the winter, which will remove some capacity. Even if we have a pullback in prices in late winter/early spring, it’s more likely to be a dead cat bounce than a continual fall.”
The Tampa Steel Conference platform will open tomorrow, Friday, Jan. 29, so registered attendees can begin exploring the platform, check the attendee list, request appointments with other attendees, and review the agenda and complete your calendars for the day of the event (Feb. 2). We will have close to 400 attendees from manufacturing, service centers, trading companies, steel mills, toll processors, logistics, ship and port people and suppliers to those industries. For more details about our speakers, costs to attend and how to register, go to www.tampasteelconference.com.
As always, your business is truly appreciated by all of us here at Steel Market Update.
Tim Triplett, Executive Editor
Tim Triplett
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