Final Thoughts
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Final Thoughts
Written by Michael Cowden
September 8, 2022
It’s time to forecast 2023, and I’d like to throw out one radical possibility – or at least one worth thinking about. What if there are no black swans?
I know, that possibility is so remote that it’s almost laughable. We haven’t had many normal years since 2018.
That year gave us the shock of Section 232. Then 2020 brought us the pandemic and HRC prices falling into the $400s per ton, only to rebound to nearly $2,000 per ton in 2021 when demand unexpectedly snapped back.
And this year, Russian forces invaded Ukraine just when it seemed like things were getting back to something resembling normal – sending prices soaring and then crashing yet again.
I suggest considering normal because it strikes me that I keep asking myself whether the market will inflect up or down – and it hasn’t for the last month. It’s bobbed around ~$750-850/ton, practically flat compared to the volatility we’ve grown used to.
What if something like that is our “new normal” range? Is it possible that we could mostly bounce around between $700-900/ton in 2023 just like we used to bounce around between roughly $400-600/ton in past cycles?
Again, one to think about.
As for the current cycle, it strikes me that we had a price increase delivered by Cleveland-Cliffs via press release. Remember when AK Steel used to that? And that it happened immediately after the end of Steel Summit. NLMK USA followed it. And both moves followed increases earlier in August from Nucor and ArcelorMittal Dofasco.
There are two ways to look at those increases. Either that they didn’t work. Or that they succeeded in putting in a floor under prices coming out of an extremely bearish July.
The scuttlebutt along the sidelines of Steel Summit – and continuing to this day to some extent – is that several larger service centers placed very big orders at prices beginning with a six before the last round of price hikes was announced. (The company names and tons vary depending on who you talk to.)
That’s one straight from the old mill play book. Take in big orders at low prices immediately before (and maybe immediately after) a price hike. That fills the mills and pushes out lead times so you have a better shot at enforcing those increases. It might also result in prices temporarily nosediving – but it’s arguably worth it in the long run.
What seems to be a little bit different this time around is that service centers might have accounted for many of those low-priced tons. A cheap sale to a welded pipe producer will go into the ground. You won’t see that low price in the market again. Someone making steel studs will put it behind drywall. That low price won’t be out in the market again either.
But a big, low-priced sale to a service center? That price will hang around in the market for a while, maybe until the end of the year if the volumes on some of these rumored deals are accurate.
So mills might have succeeded in putting a floor under prices. Did they also put a roof above them in the process?
By Michael Cowden, Michael@SteelMarketUpdate.com
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Michael Cowden
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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?
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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!