Final Thoughts

For starters, plate prices took a big tumble – down $75 per ton ($3.75 per cwt). It’s not exactly a surprise following Nucor’s announced plate price decrease last week.

But it’s still news. Plate prices, unlike sheet prices, had been relatively stable year-to-date, despite the massive swings in sheet prices before and after the war in Ukraine.

Also, we haven’t seen a $75-per-ton plate price decrease since we started keeping record on plate prices back in March 2017.

If you’ve been paying close attention to our coverage, this shouldn’t come as a total shock. Scrap prices were down significantly last month. Plate prices were (and still are) more than double hot band prices. And while sheet and plate markets have different underlying dynamics, many market participants has become convinced that the delta between the HR was discrete plate was not sustainable.

It’s an analogous story on the cold-rolled and coated side, where spreads between HRC and galvanized base prices, for example, remain extremely wide – perhaps too wide to be tenable for much longer.

As I’ve noted before, hot-band prices had been falling at a rate of $45-50/ton per week since May. That trend has moderated a bit lately – HRC prices have been falling at around $35/ton per week over the last three weeks.

There is a logic there. There is a rough rule of thumb that some integrated mills are near breakeven at approximately $600 per ton. There might not have been much reason to resist lower prices while everyone was still making money on every ton they produced. Now we’re getting closer to a point where that can’t be so easily taken for granted.

Cold-rolled and coated prices, meanwhile, have some catching up to do. Especially if a spread of ~$400 per ton between HR base prices and those for CR and coated products is not sustainable. What will the new spread look like?

It’s been more like $200 per ton over the past five years or so. That would imply cold-rolled and galvanized base prices around $1,000 per ton, or roughly the price of pig iron in the early days of the Ukraine-Russia war. And recall that was in early March – just five months ago, although some days if it feels like another galaxy.

What might things look like five months from now? Will current tensions in the Taiwan Strait prove fleeting, or will we be talking about their impact on steel come Jan. 2, 2023? Will we be talking about the lasting impact of a strike or lockout at a major domestic mill? Or will all that we’ve written about labor contract talks turn out to have been much ado about nothing?

I wish I could say with confidence that the world would be more boring place in January 2023. Boring – in politics, pricing and supply chains – might be the new black.

By Michael Cowden, Michael@SteelMarketUpdate.com