Final Thoughts
Final Thoughts
Written by John Packard
February 17, 2021
Good news for NLMK USA customers as the mill has worked out a tentative agreement with the union at their Farrell, Pa., facility, which will end the strike that goes back to late August. Once back in production, this will help (slightly) with some of the supply issues we have been seeing in the market. However, I would not anticipate any reduction in prices as this new capacity comes back online.
We understand Nucor, California Steel Industries, ArcelorMittal Calvert and other mills are out there quoting HRC prices at or exceeding $1,200 per ton. Upward momentum continues as the steel mills eye taking prices even higher.
The question I have (and this is my opinion): At what point do these $1,000+ hot rolled spot prices damage end users, especially the construction markets, which account for approximately 40 percent of steel consumption? We are seeing reports that both residential and commercial construction are reacting to the high price of steel and lumber, and the process of putting projects on hold has started. What does it take to kill the golden goose?
There have been many changes to Steel Market Update over the past few months. Some you may have noticed, others are more subtle or hidden from view. We have added Michael Cowden, formerly with FastMarkets/AMM as a senior writer/editor and David Schollaert as an analyst/writer. The two of them, combined with our existing team, have allowed us to expand and improve our content in both the Executive and Premium forms of our newsletters. We are also using CRU analysis in both our Executive and Premium newsletters as they cover areas of importance where we don’t have their level of expertise.
We have added new content to our website as we strive to provide more information to our members. One report you may want to access is about when (and who) announces price increases. You can find that information by clicking here.
You will be learning more about our expanded content as we delve deeper into scrap, DRI, pig iron and other subjects that impact flat rolled and plate steel prices.
The expanded services come at a cost to Steel Market Update, which means we will need to raise our renewal prices. We continue to recommend that our Executive level members consider upgrading to our Premium product, which includes more analysis, access to the SMU Service Center Inventories data, our survey PowerPoint presentations and much more. You can learn more about the costs to upgrade by reaching out to Paige Mayhair at Paige@SteelMarketUpdate.com
Registration is open for our SMU Steel Summit Conference (Aug. 23-25), and we are closing in on our first 100 registered attendees. We have received registrations from the following companies. Those noted with an asterisk (*) are sending more than one person from their company. We have not yet registered our speakers, sponsors, exhibitors, and the SMU/CRU staff members. Here are some of the companies registered: Algoma Steel Inc.*, All Metals*, Bay Cities Metal Products*, Heidtman Steel Products, Inc.*, Klauer Manufacturing Company*, Metal Edge Partners LLC*, Myers Container, New Process Steel, North American Steel Alliance*, North Star BlueScope Steel LLC*, Railroad Friction Products Corporation, RMS Manufacturing, Ryerson, Siskin Steel and Supply*, Trend Publishing, and Wisconsin Steel & Tube Corporation*. You can add your company name by clicking here to register. You can learn more information about the conference by clicking here.
Our next Steel Hedging 101: Introduction to Managing Price Risk Workshop will be held on March 30-31 (half day each day). This is an excellent workshop that covers:
- What is “hedging” and why do so many companies do it?
- What makes hedging in steel different than other commodities?
- The structure of the market and the mechanics of how trades are executed.
- The costs and risks involved.
This Steel Hedging 101 workshop will be conducted on our virtual platform, which we have been using for more than six months due to the pandemic. The advantages of a virtual workshop are the ability to watch segments both live and on-demand should you miss something or want to re-visit a particular topic. There are resources loaded onto the platform that can be downloaded, and you can do live networking during the event. Q&A sessions are conducted live after each module. The platform remains open for a few weeks after the initial event, which allows ample time to clearly understand every module. Our instructor, Spencer Johnson of StoneX, is well known within the HRC Futures market, and he will become an asset for you to use after the class is over. You can learn more about the agenda, costs and how to register by clicking here.
For more advanced hedging instruction, we have our first Steel Hedging 201: Advanced Strategies & Execution workshop next week (Feb. 23 & 24, half day each day). There are a few seats left for this workshop, and you can learn more about the agenda, costs to attend and how to register by clicking here.
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
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Final thoughts
Sometimes even in a bit of chaos there is complacency. And it seems that since March 2020, “a bit of chaos” has been the order of the day. That means in the world at large, and in steel specifically.
Final thoughts
SMU had the pleasure of attending the American Iron and Steel Institute's (AISI's) annual general meeting in Washington this week. It was a slow week in our nation's capital, so we were able to take a leisurely stroll around the National Mall and take in the sights. Just kidding. In fact, the meeting coincided with significant trade actions announced by the Biden administration. It included, among other things, additional tariffs on Chinese steel and aluminum.
Final thoughts
Our spot price is little changed this week after moving sharply lower last week on the heels of Nucor’s unexpected price cut. Here’s one thought on that trend: Nucor's weekly HR price (aka, its “Consumer Spot Price” or CSP) has to date functioned almost more like a monthly price.
Final thoughts
What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.
Final thoughts
Last week we wrote about a brief lull in price movement, labeling it a period of wait and see. It did, in fact, turn out to be pretty brief. This week... things are little bit different. Perhaps right now we are more in a period of "hope and pray" or "Here we go, hold on to your hats."