Final Thoughts
Final Thoughts
Written by John Packard
February 10, 2021
Steel Market Update released the final detailed report on service center inventories and shipments to our data providers on Friday. It will be released to our Premium level members tomorrow. I mentioned in Thursday’s Final Thoughts that watching this data is one of the keys to figuring out when the market may get to a tipping point. Our data reviews incoming orders along with the number of days of supply (which we feel is a more accurate comparison than the number of months supply). If you would like to receive this information, you will need to either become a data provider (contact me or Estelle Tran at Estelle.Tran@crugroup.com to learn more about becoming a confidential data provider) or to become a Premium subscriber (contact Paige Mayhair at Paige@SteelMarketUpdate.com for information about our Premium newsletter and services).
Slab prices into the U.S. market from Brazil are running around $770 per metric ton, USA port. Global prices are lower than what is being offered into the U.S. market. One of the steel mills told SMU, “Of course, with $60/cwt HRC, the slabs are hot….Having said that, the entire Q2 quota is already mostly sold…there won’t be many new bookings that could actually clear customs before July 1.”
The same mill also weighed in on the strength of steel prices in the U.S. “Prices are going to hang on longer than the panickers think. Those buying slabs at $800 and selling HRC at $1,300 are making a fortune now. Gotta keep some of that money around for a rainy day. Cyclical biz.”
The next hedging workshop coming up will be our first Steel Hedging 201: Advanced Strategies & Execution on Feb. 23-24 (both are half days). Our instructor is Spencer Johnson of StoneX. Assisting Spencer will be Tim Stevenson of Metal Edge Partners. We will also have comments from the CME Group on the exchange and CRU about the HRC index.
To learn more about this virtual workshop, costs to attend, etc., please click here. If you have any questions, please feel free to reach out to me at John@SteelMarketUpdate.com
2021 SMU Steel Summit Conference is also open for registration as we return to the Georgia International Convention Center on Aug. 23-25. You can learn more about the conference, costs to attend, discounts offered for SMU/CRU members and those bringing more than one person by clicking here.
There is much going on within the steel industry and Steel Market Update will be watching closely.
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
Another day, another massive gap between the news and market sentiment. On the news side, we’ve got war in the Middle East. The devastation facing western North Carolina coming into tragic focus. And the outcome of the presidential election remains a coin toss, according to current polling.
Final thoughts
There are markets where the headlines and the prices are both crazy. This does not appear to be one of them, at least not yet.
Final thoughts
Washington loomed large in our surveys this week. Two things actually: the upcoming presidential election and the trade case against imported coated products from 10 nations.
Final thoughts
Thanks to everyone who attended our Steel Hedging 101 workshop in Chicago on Wednesday. I learned a lot from StoneX Group’s Spencer Johnson, who instructs the course, and from your good questions. One thing that Spencer said sticks with me as I write this column. Namely, that momentum drives steel prices more than other commodity markets. If you watch steel futures, you’ll see up days and down days. But it’s rare to see the momentum shifting back and forth within any given day.
Final thoughts
SMU's prices ranges for flat-rolled steel were mostly sideways on Tuesday even as futures market shot higher. I got some questions as to why hot-rolled (HR) coil futures shot higher. As best as I can tell, it might have been in response to news that China plans to roll out stimulus measures. We have details on those measures here thanks to our colleagues at CRU. The chart below gives you some idea of just how sharply upward the move in HR futures was earlier on Tuesday: