Final Thoughts

Final Thoughts

Written by John Packard

Everyone is searching for clarity. We are searching for clarity as well. There are many moving parts affecting the current market, and we are not sure what the future is going to look like just a few months from now. With Putin’s war against Ukraine, and the sanctions imposed by the United States, Europe, and other allies around the world, the landscape is littered with pitfalls for steel buyers here in North America.

The head of a Midwest-based service center expressed some concerns he was having with his customers who he described as being “nervous” and “emotional” about the potential impact of the latest Black Swan Event. I was told their customers are looking for more steel, even though inventories are balanced, or a bit on the high side (SMU has flat rolled inventories at service centers at 2.7 months supply). If customers build inventory out of an emotional response to the war (and threats of higher steel prices in the future) this could lead to a negative market later this year (assuming the war in Ukraine will be over within the next 90-120 days).

Last week, Steel Market Update adjusted our benchmark hot rolled coil Price Momentum to Higher from Neutral. This week we are adjusting Momentum on cold rolled, galvanized, and Galvalume to Higher as well.

When steel mills announce price increases, it is our normal procedure to take our Price Momentum Indicator and move it to a guidance of Neutral. We then wait for guidance from the steel buying community to advise SMU as to where prices are going, and if the price increases are holding, remaining stable, or dropping. We do not want to influence the market by attempting to “guess” where prices are headed, so we look for multiple data points as well as our conversations with steel buyers to direct where we will set our Price Momentum Indicator in any given week.

gearsAs we have discussed in past issues, the unprovoked war in Ukraine and the impact it is having on the world steel markets is indeed a Black Swan Event. No one was predicting a war just a few weeks back (although I must give the U.S. government a nod for warning the world as to the intelligence they were collecting).

We are searching for clarity.

You can assist us by advising SMU as to what disruptions you are experiencing, what your customers are asking of you, changes in lead times or issues you might be having with the supply chain that did not exist a few weeks ago. You can email your comments to either Michael Cowden ( or myself ( You can also reach me by phone at 770-596-6268.

As Michael Cowden, the CRU Events Staff, and I work on the 2022 SMU Steel Summit Conference we are working toward producing programs that address the needs of active buyers and sellers of flat rolled and plate steels. There are several big items needing to be addressed:

  • What impact will the war in Ukraine (or the remnants of the war) and the resulting sanctions on Russia have on North American business? We understand this is a fluid situation and the issues in August may be much different than what we are working with today.
  • We expect sanctions (and tariffs) to continue to exist in August, although we could see some adjustments depending on supply chain issues here, and the status of the war and any negotiated settlement with Russia. We are looking at having a slightly different trade panel this year, which can address the issues with world flows as well as the flow of foreign steel into the U.S.
  • We need to watch to see if the domestic mills become exporters of finished steel goods to Europe or other areas of the world and what this would mean for supply.
  • We will have a few analysts forecasting steel prices (and the in-put critical to producing steel).
  • Decarbonization may be taking a back seat in the current news cycle, but the topic is far from dead and will need to be addressed at this year’s event. I am looking at new ways of discussing the topic that are beneficial for our attendees.
  • There will be several keynote speakers from steel mill CEOs, economists, industry experts, and more. We will be announcing new speakers in the coming days.

I am working in several areas so we can provide an interesting, educational and beneficial conference for all attendees.

You can register for this year’s conference by clicking here.

If you are concerned about steel price volatility and how you can better manage it within your organization, we will be hosting our next Introduction to Steel Hedging Workshop virtually on April 26-27. This will be done through our online platform, and the workshop will consist of a half-day instruction on both days. You can learn more about the workshop by clicking here.

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

John Packard, Founder

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