Final Thoughts
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Final Thoughts
Written by John Packard
March 8, 2021
A couple weeks back we were beginning to think the rise in spot prices would soon slow and we were close to a tipping point. We no longer have that opinion due to Snowmageddon, the winter storm that exacerbated the already late deliveries out of multiple steel mills. On top of that, we are seeing mills scheduling maintenance on equipment or downtime on furnaces during the months of April, May and June. This will shrink supply even further at a time when we thought prices could be vulnerable to a slide.
“Now we believe we’re heading north of $1,300 before topping out. The market has actually tightened further in the last week or so,” is what we heard from the general manager of one service center. “The USS-announced BF outage, and now AM/NS Calvert outages in May, are examples of why it’s difficult to get the capacity utilization rate much higher in this environment. With HR Futures now over $1,000 through November, capitulation seems to have emerged and high prices may be here for a long time….”
When speaking with a salesman who represents a large hot rolled supplier earlier today, I was advised the spot number between service centers was now $1,400 per ton ($70.00/cwt). A truly historic number for HRC.
It appears that number could rise in the coming weeks as the domestic mill spot number breaks through $1,300 per ton average (which means there will be numbers much higher than $1,300).
Our Price Momentum Indicator continues to point toward Higher spot prices over the next 30 days. We continue to warn steel buyers to remain vigilant, keep in touch with your mill suppliers, watch lead times and inventory levels, and be aware of any changes you might see in demand out of your customers.
Other items to watch (and ask questions of your customers) are: How much foreign steel is on order and how will those tons affect the domestic order books? Also, how much material has been double ordered by end users as they try to navigate the late mill and service center deliveries? The answer to those questions will have an impact on inventories and the pace of the decline once the market tips over.
SMU Events
The next workshop on the docket is on March 30 and 31 when we will conduct our virtual Steel Hedging 101: Introduction to Managing Price Risk Workshop. We have plenty of room to add those who want to learn more or wish to be introduced to the subject of hedging/managing price risk. You can find more information by clicking here or visiting the SMU/CRU Steel Training website.
I received my second COVID vaccine last night (Monday). I must admit I have some localized soreness and general aches and pains, but nothing that I would consider severe or disruptive to my daily routine. I continue to recommend, when your slot opens, you get the vaccine. Especially if you are considering attending this year’s SMU Steel Summit Conference at the end of August. Some of you may have noticed the CDC (Centers for Disease Control) is now saying vaccinated people can mingle without needing to wear masks. Our hope is the numbers of those being vaccinated continue to rise and our conference will go off as a live event. You can learn more about this year’s conference online 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
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John Packard
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
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Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
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Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!