Final Thoughts

Final Thoughts

Written by Michael Cowden

It’s the time of year when I’m going to be banging the drum about Steel Summit – even in the lede to Final Thoughts 🙂

We’ll get to the latest steel market trends in a moment. But first I want to highlight that hotels are still available near the Georgia International Convention Center (GICC) in Atlanta, where the conference is being held Aug. 21-23.

Steel Summit Hotels

With more than 900 people already attending, our room blocks on the GICC campus are sold out.

But that shouldn’t be an obstacle to those of you who haven’t registered yet. Plenty of hotels are available in the airport area just a couple of miles from the conference venue.

Steel SummitBelow are some that still have rooms during the conference dates. I’ve also listed their distance to the GICC. None are more than a short drive away:

Atlanta Airport Marriot – 1.1 miles away

The Westin Atlanta Airport – 1.1 miles away

Fairfield Inn & Suites Atlanta Airport South/Sullivan Road – 1.2 miles away

Courtyard Atlanta Airport South/Sullivan Road – 1.2 miles away

Renaissance Concourse Atlanta Airport Hotel – 2 miles away

TownePlace Suites Atlanta Airport North – 2.1 miles away

Fairfield Inn & Suites Atlanta Airport North – 2.2 miles away

Four Points by Sheraton Atlanta Airport West – 2.5 miles away

Courtyard Atlanta Airport West – 2.5 miles away

You can learn more about Steel Summit, the agenda, and register here!

Community Chat

Wolfe Research managing director Timna Tanners will speak at Steel Summit with CRU principal analyst Josh Spoores and IHS Markit director John Anton.

We’ll also catch up with Tanners during our next Community Chat on July 12 at 11 am ET.

We’ll talk about what Tanners describes as “the myth of mill discipline.” Yes, the domestic sheet industry is more consolidated than it used to be. But does it have as much clout as advertised?

We’ll compare the consolidation in the US sheet market to that of the domestic rebar market. We’ll in addition talk about the galvanized market, which has quietly seen significant capacity expansion – even as HRC capacity growth garners more attention.

You can register here.

Steel Market Trends

We’ve seen some decrease in mills’ willingness to negotiate lower prices.

FT July 9 2023 IMG 1

We’ve also seen an increase in the number of service centers holding prices steady (instead of cutting them).

FT July 9 2023 IMG 2

So far, that looks more like what we saw in Aug-Sept 2022, a price increase that might have stopped or slowed the bleeding in prices rather than increasing them.

If we’re to see prices rise significantly, as we saw in Q1, we’d expect to see the number of mills willing to cut deals go down in our next survey. We’d also expect to see service centers rising prices in tandem with mills, something we haven’t seen to date.

I’ve noted in past columns that it might take some unexpected event to change current markets dynamics of steady demand but increasing supply. Does the two- to four-week unplanned outage at SDI’s sheet mill in Sinton, Texas, qualify as such an event?

I ask that because there are some similarities now to what drove prices higher in Q1. Namely, AHMSA going down and SDI having issues ramping up. That led to a shortage in the southwest that then spread northward.

To be clear, it’s only the hot end at Sinton that’s down. Cold-rolling and coating operations continue. Still, the substrate for that will have to be sourced elsewhere, perhaps from SDI’s mill in Columbus, Miss. – which could reduce availability there.

I’m not saying we’re going to see something on the magnitude of the price spike we saw in Q1. But is it possible we’ll see the downtrend we’ve seen in domestic sheet prices reverse – especially should we see another round of price hikes from domestic mills?

Futures markets (caveat: they don’t predict the future but do provide an informed view on it) moved up last week, perhaps on rumors of the unplanned outage at SDI, which wasn’t officially confirmed until Friday afternoon.

Market chatter about the direction of prices was decidedly more mixed, with some market participants saying that discounts remained available from one large domestic mill while others, even some sizeable buyers, said they weren’t seeing offers below $900 per ton for HRC.

We’ll look to gain some clarity on the direction of sheet prices as the dust settles on the impact of the SDI outage and any new round of price hikes – if one occurs.

Related to that point: I know some of you expected to see another round of price hikes either on Friday or early this week. Before Friday, I’d have said I expected them to. Part of me, though, wonders about the optics of an announced price hike on the heels of an unplanned outage.

One more thing to keep in mind in the week ahead: Remember when an unexpected cold snap in Texas caused widespread power outages in early 2021? The event forced mills in Gulf Coast and northern Mexico to temporarily shut and sent sheet prices soaring.

I’m not saying that something of that magnitude will happen again. But it’s worth keeping an eye out for any significant power outages with a heat wave expected to strain grids in Texas and the Southwest.

That’s for now. I look forward to catching up with some of you during the Community Chat on Wednesday and with many more of you at Steel Summit in Atlanta.

Many thanks, in the meantime, from all of us at SMU for your business!

By Michael Cowden,

Michael Cowden

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