Final Thoughts

Final Thoughts

Written by John Packard

There will be no Steel Market Update published on Sunday, July 4th, due to the national holiday (USA). We will resume coverage on Tuesday, July 6th. We wish everyone a safe holiday filled with family and friends (at least for those who have been vaccinated).

Interesting comments received earlier this week from a steel executive whom I know well, and I respect his opinions. The topic of the day was one that I know drives the steel mills crazy – steel analysts’ price projections.

Many of the analysts are calling for prices to peak within the next 60 days (in other words, we should be seeing signs of a peak by the time the SMU Steel Summit Conference begins on Aug. 23). Not every analyst is making those predictions, and it will be interesting to hear what Timna Tanners (Bank of America), Josh Spoores (CRU), and John Anton (IHS Markit) have to say when they provide their analysis at our conference.

John Packard Summit 18The conversation I had with this steel executive was about how the analysts have been incorrect in calling this market, and how that has benefited holding prices up. “These 30,000-foot analysts who have been wrong for 12 to 24 months but keep saying the same stuff are manna from the heavens… Their narrative and dire impending doom predictions have conditioned buyers never to get ahead and get inventories to healthy levels.” The end result being buyers shied away from buying as much foreign steel as they could have, and they kept inventories low. And with demand being much stronger than many analysts realized, and mill production issues continuing through the entire cycle, the expectation from this steel executive is for high prices to continue for much longer than people think.

During this week’s survey of flat rolled and plate steel buyers, we asked when they believe steel prices will peak and then begin to decline?

One service center executive told us, “I expect pricing to peak sometime in the fall, probably in the later September-October timeframe, but I’m not certain as to how much more it may increase between now and then. I’d still argue today that a more gradual correction is likely, especially in the first 2-3 months or so of a correction. But there could be an “acceleration phase” in the downturn, then a plateauing period – most likely caused by swift announcements of mill production cutbacks in response.”

One manufacturing company executive who was becoming bearish on pricing a few weeks ago changed his tune, pointing to production and maintenance at the domestic steel mills as becoming a major issue to consider. “Due to Nucor/SDI issues, I believe it won’t be till late Q3/Q4 now when they peak. CC [Cleveland-Cliffs] Indiana Harbor BF #7 going down Sept. 1 for 45 days is becoming a huge issue now.”

A Midwest service center told us, “Our best guess is late in the third quarter or early fourth quarter; we think mills still have a lengthy backlog and still need to catch-up. Further, the planned (and unplanned) outages may help support the market longer than otherwise.”   

A large service center was quite specific as to when they think prices will peak: “When lead times hit February 2022.”

Part of steel pricing is psychological (at least it has been that way in the past). How buyers perceive the market and what factors are moving prices up (or down). When the factors influencing prices will turn and, in the process, change the direction of steel prices. And a bigger part is how strong demand is in relation to supply, and how quickly supply can be replenished. (And does the buyer take the risk of buying spot tons at today’s prices in the hope that high[er] prices continue?)

SMU started our flat rolled and plate steel service center analysis today for the month of June. We will have our “flash” report available, to data providers only, mid next week, and the full report the following week. It will be interesting to see if inventories are up from May levels (and if so, by how much) or if they have remained around 2.0 months of supply, which is too low for current demand levels and steel mill lead times.

If you are a service center/distributor of flat rolled (HR, CR, GI, AZ) or plate steels and you would like to participate as a confidential data provider, please reach out to and she can discuss with you how the process works, how we protect your information and what you get in return from us. If you are an Executive level member, be advised that Premium level members receive a portion of the final report the day after the data providers. If you would like to upgrade to Premium level service, or if you wish to learn more about what Premium level members receive, please contact and she can get you more information or make changes to your membership.

SMU Steel Training Workshops: Steel 101 and Steel Hedging 201

We have two workshops on the horizon: Steel 101 and Steel Hedging 201.

Our well-known and well-attended Steel 101: Introduction to Steel Making & Market Fundamentals Workshop will be held virtually on July 20 and 21. Our Steel 101 workshop covers the steel making, rolling, qualities, how steel is bought and sold, and the issues affecting steel prices. Our instructors–Mario Briccetti, Roger Walburn and Chuck McDaniels–are experienced steel professionals (two are metallurgists) and instructors. You can learn more about the agenda, our instructor biographies, costs to attend and how to register by clicking here.

The second workshop coming up on our calendar is our still new (well-received and well-attended) Steel Hedging 201: Advanced Strategies & Execution Workshop. This workshop will be held virtually on Aug. 3-4 with Spencer Johnson of StoneX and guest instructors. This workshop is for those who have some experience with hedging price risk (either from our Steel Hedging 101 course or from industry experience) and desire a deeper dive into the strategies behind hedging and how to manage the risks associated with your company’s business. You can learn more about the agenda (which is two half days), instructors, costs to attend and how to register by clicking here.

Enjoy your Fourth of July Holiday!

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

John Packard, President & CEO,


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