Final Thoughts

Final Thoughts

Written by John Packard

Some of you may have noticed that we have adjusted our language when it comes to the SMU Price Momentum Indicator. At this moment, the momentum indicators for hot rolled, cold rolled, galvanized, Galvalume and plate steels are pointing toward higher prices over the near term (next 30 to possibly as far out as 60 days). We are hesitant to look out more than 30 days. Steel prices are at historical highs (not adjusted for inflation) with benchmark hot rolled now averaging $1,180 per ton. This is $110 per ton higher than the last high recorded by Steel Market Update in early July 2008.

HRC Price chart 2.11.2021

If you look at the graphic above (which comes from our website and is available to all members), note those areas where there is a steep incline are always followed by an equally steep decline in prices. If you look at the graphic presented, there is no case where prices leveled off and remained at the peak. As one of my mentors told me many years ago, and reiterated to me within the past few days, “steel prices are either going up or they are going down.” History indicates my mentor is correct.

We are at historical highs. We would be negligent if we did not point out to steel buyers (and sellers) that you must be keenly aware of a few key indicators:

  • Inventories: Steel Market Update has a proprietary service center inventories index which is produced on the 10th working day of each month and is published in our Premium newsletter. The key is to watch the number of days (or months) of supply and how much material is on order.
  • Lead times: Lead times are extended to historical levels. As mills catch up and begin delivering orders “on time,” the lead times will come back in. As they come in, the need to buy inventory is reduced (as orders are already on the books), which puts pressure on mill order books and subsequently price negotiations.
  • Price negotiations: Any change in offers from the domestic steel mills?
  • Changes in demand: Watch automotive (which is having an issue with semiconductors right now) and commercial construction.
  • Changes in supply: Will there be more or less supply of steel coming into the market in the coming weeks and months, and how balanced will supply and demand be?
  • Foreign steel: Is there more foreign steel incoming and will new foreign steel offers put pressure on domestic steel prices?
  • Mill inputs: The price of scrap, iron ore, pig iron, etc.

SMU is not forecasting an immediate change in the direction of spot prices. We will be watching the indicators noted above and reporting on what we find as it becomes apparent.

Over the past two days I have been working with our instructors as we conducted one of our Steel 101: Introduction to Steel Making & Market Fundamentals Workshops (next Steel 101 workshop is May 11-12, 2021). Although the workshop was conducted in a virtual format, we hosted just as many attendees as we do when the workshop is live.

One of the benefits of doing virtual workshops is the ability to pack more information into the program than we can during a live event. We also can have more focused live question and answer periods and networking opportunities than a live event. It may seem counterintuitive, but those who want to learn and want to meet others within the industry are afforded the opportunity to do that within our training platform.

For those thinking about attending the 2021 SMU Steel Summit Conference in Atlanta on Aug. 23-25, I noticed an article in The New York Times this morning that cited medical professionals who believe as many as 33% of the U.S. population has been infected with the coronavirus (that is not what has been reported) and another 10 percent have received the first dose. The comment in the article was that we are coming close to “herd immunity.” I saw another article referencing comments from Dr. Fauci suggesting the vaccine would be readily available to most adult Americans by April.

I received my first dose of the Moderna vaccine on Monday. My second dose will be on March 8. I can tell you I had limited reaction to the shot. A little soreness in my arm that I would suggest was similar to a flu shot. On Wednesday, I did feel a little “off” and lethargic compared to my usual self, but that only lasted a few hours. Today I feel great.

So, our expectation is that we will have a live in-person conference this year. We will adhere to specific COVID-19 guidelines based on what the CDC, local government officials in Georgia and our own company policies are at the time of the event. I would suggest that anyone considering attending, please get vaccinated prior to arrival.

We have opened registration for the event. You can learn more about costs, agenda and how to register by clicking here. I can tell you I have already received commitments from a number of top mill executives along with Alan Beaulieu of ITR Economics and Michael Smerconish of CNN. We will have a strong program as usual.

If there is a speaker(s) that you would like to suggest to me for consideration, or a topic that you think is underserved and needs to be discussed, please send me a note at

I am looking forward to going back to live events and feeling the energy in the room and being able to interact with the wide variety of attendees we get from manufacturing, distribution, steel mills, service centers, toll processors, the financial community, logistics and many others associated with the industry. The SMU Steel Summit Conference will be the place to see and be seen in 2021. Click here to learn more.

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

John Packard, President & CEO,

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