Final Thoughts
Final Thoughts
Written by John Packard
July 22, 2021
This evening we published our SMU Mill Lead Times by Product analysis. I recently received a few questions on the subject: How do we gather our lead time data? Do we take into consideration the lead times being published by the individual domestic steel mills? How do we feel the information we report is indicative of what is happening in the market?
- The lead time data is collected during our flat rolled and plate steel market trends survey. This survey is conducted every other week. We only collect mill lead time data from manufacturing companies and steel service centers/wholesalers. We do not collect lead time data from steel mills, trading companies or toll processors. We compile the data collected and come up with an average based on the total number of responses.
- We do not collect data from the steel mills, as our goal is to produce a representative sample of what steel buyers are seeing from their suppliers, which may differ from what the mills may be reporting for general consumption.
- What we are trying to capture are changes to the markets represented by changes in the average mill lead time by product. When mill order books are full, lead times extend and the ability of steel buyers to negotiate lower prices with their mill suppliers is reduced. As lead times shrink, the opposite occurs. Mill order books weaken, creating opportunities for steel buyers to negotiate lower steel prices. Lead times are also an indicator of market strength, and changes in lead times would be one of the indicators signaling a change in the direction of market demand, which in turn affects price negotiations.
We are in a market cycle that is closing in on one full year of prices increasing. In my 44-year history in the steel business, I have never witnessed an upward price cycle lasting this long. Prices will correct at some point in time. Exactly when, and how quickly prices move lower, will depend on many factors. The biggest being the strength of mill order books, which are reflected in mill lead times.
SMU Steel Summit Conference Update
We are now one month away from the start of the 2021 SMU Steel Summit Conference (Aug. 22-25) in Atlanta.
As we get closer to the conference, I want to emphasize the responsibility each attendee has to provide a safe and comfortable environment for our speakers, staff, and your fellow attendees. There will be attendees traveling from throughout the United States, Canada and Mexico. Each of those geographical areas has been dealing with COVID-19 differently, but one thing is consistent. Those who are vaccinated against COVID-19 are protected against serious illness and are less likely to spread COVID to others. We want to run a safe, entertaining and successful event, and you can help by making sure you are fully vaccinated prior to attending this year’s conference.
The world has changed over the past 18 months. The pandemic has changed the way we interact with one another. Our comfort levels with physical contact will vary from person to person. It is going to be a little strange for all of us to be in a large group setting. We will have special badges, or indicators on an individual’s badge, which will designate whether they are comfortable with close contact with other attendees.
It is our intention to daily test the SMU and CRU staffs to ensure we are COVID-free and safe for interaction with our attendees. Our team will be wearing masks during the event, which is required by the Georgia International Convention Center. We will go over protocols with all attendees in multiple forms in the coming weeks including the Aug. 11 SMU Community Chat Webinar.
I have already begun to have one-on-one discussions with our speakers/panelists. We have a strong lineup. I can tell you the speakers are excited to be in Atlanta at our conference and sharing with you their perspectives on the economy, demand/supply issues, pricing issues, new supply, forecasts for automotive/construction, decarbonization (and what that means for U.S. manufacturing/mills), electric vehicles and much more. The following steel mill CEOs will be speaking: Mark Millett (SDI), Leon Topalian (Nucor), Lourenco Goncalves (Cleveland-Cliffs), and Cesar Jimenez (Ternium Mexico). Alan Beaulieu of ITR Economics will join us once again. We will have programs on scrap, transportation and much more. You can register for the conference (either to join us in Atlanta or virtually from the comfort of your office) by clicking here.
The following companies registered to attend over the past 48 hours (those with an * means more than one person was registered): Big River Steel*, Bradesco BBI, Camden Yards Steel Company, DOT Metal Products, Fortacero*, Gulf Coast Supply and Manufacturing, Hatch Stamping, Maruichi Leavitt Pipe & Tube*, Metal One America Inc., Mitsui & Co. USA, Northview Advisors, Ryder Systems Inc.*, and Tata Steel Americas*. The following companies added more executives to their already existing registration: Coilplus Inc.*, Nucor Steel*, and Southwark Metal*. We still anticipate close to 1,000 attendees at our live event and a smaller number on our virtual platform.
For those of you who have attended past Steel Summit conferences, we have made some changes to this year’s event. All of the program (including the Pre-Summit Program) will be held in the Georgia International Convention Center (GICC). We will provide lunch in the convention center on Monday (this is new). We will also conduct our official conference opening at 1 p.m. ET on Monday (this is also new; we used to do this on Tuesday morning). We have a strong program beginning pre-summit at 9 a.m. ET on Monday, so you may want to consider traveling to Atlanta either on Sunday or very early Monday morning. I will personally be at the facility on Saturday as we prepare for the Monday kick-off.
A reminder that the Gateway area hotels are all sold out (Atlanta Airport Marriott Gateway, Atlanta Airport Renaissance Hotel, Atlanta Airport Gateway SpringHill Suites, AC Hotel at Atlanta Airport Gateway). I would recommend you contact the hotels’ direct number to see if they have any cancellations, otherwise I would recommend you try two Marriott properties that are located 1-2 miles from the GICC. Those hotels are both located on Best Road and are the Airport Marriott Hotel and the Airport Westin Hotel.
We continue to add speakers and tweak the agenda. You can view the latest agenda by clicking here or going to this website: https://events.crugroup.com/smusteelsummit/home
On Aug. 2 & 3 Steel Market Update will host our next Steel Hedging 201: Advanced Strategies & Execution Workshop with our instructor Spencer Johnson of StoneX. This workshop is geared toward those who have a working knowledge of the futures markets and are interested in learning more about what strategies to use to manage their company’s specific price risk scenario. You can view videos and testimonials here: https://events.crugroup.com/steel101/steel-hedging-201-videos and you can learn more about the agenda, instructors, costs to attend, and how to register by clicking here. If you have any questions, please feel free to contact us at Events@SteelMarketUpdate.com
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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