Final Thoughts

One steel buyer with a manufacturing company pointed this out in an email to SMU this morning: “Everyone’s lead times are way off, in my opinion. Nucor still owes customers some January contract tons, so do BRS and SDI….  That is first-hand information; they all owe me tons and are way late. How can we say lead times are 9 weeks for HR when they are behind 4+ weeks already?”

Our lead time data is best used to determine the direction lead times are heading, the strength of the order books at the domestic steel mills and the impact long lead times have on price negotiations (which we also track using the same data sources as lead times).

Lead times are just one of the “trees” in the forest.

What is driving this market (and pricing) are inventories, or I should say the lack of inventories, coupled with strong demand and stumbling steel mills. The cycle will break when buyers have options and can afford to wait. That is not happening right now.

“Backlogs are incredible,” is how the conversation began with the owner of a Midwest-based service center. “Everybody needs steel. Inventory is like gold. You can’t complain [about high prices] because we can sell it. I don’t see any cracks…although I believe there are more imports coming than people think. I am adjusting volumes [lowering future steel purchases] that we are buying forward.”

I asked this executive when he thought market prices would begin to correct and was told “probably late April or May.” Although, at the same time, he said they could not see that far out and it could last through the summer. I guess there are just too many trees in the way.

I am an optimist. You have to be an optimist to be in the steel industry for as long as I have. You also need to be malleable in your thinking, as you have to deal with stresses caused by unusual and unforeseen circumstances. To last and prosper, you need to be aware of change, embrace it and adapt (or lead) through it.

I believe the steel industry and manufacturing in this country are going to go through a rebirth as the U.S. begins to embrace climate change and the need to control emissions like carbon. Carbon is the element that gives steel strength. We will begin to think differently about carbon, how to make steel (and all of the other inputs that emit carbon and affect the environment), how energy affects the environment and much more. The U.S. steel mills are well positioned on the “carbon curve” globally. We will focus on the carbon curve and the changing world we live in when we host CRU Analyst Ryan Smith, who specializes in global mill costs and competitiveness on March 17 at 3:30 p.m. ET (Ryan is based in Australia and there is a 15-hour time difference). You can register for this free SMU Community Chat Webinar by clicking here.

I want everyone to know that I am anxious to get back to “live” events. I have heard from many that you too are hankering to be able to speak to people face to face and to meet new people within the industry. Networking has always been a key component of the SMU Steel Summit Conference.

I also want you to know the SMU and CRU Events teams working not only on the Steel Summit project, but all our workshops and the Tampa Steel Conference, are doing so with the understanding that we will host safe events in light of the pandemic. We are also working with the Georgia International Conference Center and the local hotels, the state of Georgia and GICC guidelines on what will be considered safe by the end of August. We will continue to update those registered for the event, as well as those considering registering, on the policies and procedures that will be in place at the venue. As I mentioned earlier, I highly recommend getting vaccinated as soon as you are eligible to do so.

I want to express our condolences to our colleague Paige Mayhair whose father passed away earlier this week. I want to thank Brett Linton on the SMU staff and Aaron Pollock who is the head of sales for CRU in Pittsburgh for filling the void. If you have questions about your subscription to SMU, wish to upgrade, make changes, add people, etc., please send your inquiry to Info@SteelMarketUpdate.com and we will get back with you as soon as possible.

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

John Packard, President & CEO, John@SteelMarketUpdate.com