Final Thoughts

That, as most you know, is when the current labor contracts between the United Auto Workers (UAW) union and automakers Ford, General Motors, and Stellantis expire.

UAW Negotiations

Laura Miller has a good recap of the situation here.

The consensus among many of you is that a strike is a 50-50 proposition. The union is demanding a lot. But it could be a case of “Reach for the moon, land among the stars.” That camp thinks the UAW and automakers will come to an agreement at the eleventh hour.

I’ve also talked to some of you, including some auto industry veterans, who’ve said that the chances for a strike are much higher this time. You might note that UAW president Shawn Fain came to power in a close election, that the UAW has been burdened by corruption scandals, and so current union leadership is under pressure to show that it can fight for the rank and file.

That’s a volatile mix. Add to that high inflation and Covid-era grievances – notably that union members had to work in person at the height of the pandemic while office staff worked from home. Suffice it to say, I can see why Wolfe Research, as Laura Miller reports, puts the chances of a strike as high as 90-95%.

Fall Maintenance Outages

Perhaps to offset the gloom and doom around a potential strike, it appears that mills are trying to highlight another market driver – namely, fall maintenance outages.

I won’t go through a full list here because we haven’t confirmed the dates. But it’s fair to say that some mills have significant outages, two weeks or more, coming up this fall. Others have shorter outages that, collectively, add up.

A couple of sources speculated that they could amount to as many as one million tons out of the market. I could be cynical and say that mills are misleading buyers. But I don’t think that’s the case.

We saw in Q1 how a raft of spring maintenance outages combined with the unexpected shutdown at Mexican steelmaker AHSMA resulted in sharply higher prices in Q1 and early Q2.

I’m not saying that would happen again, especially if there is a strike. But is it possible that the outages at least put a higher floor under sheet prices than some might anticipate? That’s worth considering.

SMU Steel Summit Polls

Speaking of prices, we’ll be kicking off Steel Summit again this year with a few poll questions. One we always ask is where HRC prices will be at the next year’s Steel Summit.

We got that question spectacularly wrong in August 2020, when a majority of people thought HRC would be below $400 per ton in August 2021. Instead, August 2021 saw hot band at nearly $2,000 per ton.

We didn’t do much better in August 2021, when most people voted that prices would be $1,000-1,500 per ton in August 2022. Prices last August were instead approximately $800 per ton.

Did we do better this year? It appears so!

The most common responses last year were that HRC would be $700-900 per ton. Let’s say $800 per ton on average – or about where we are right now. Here’s to the wisdom of crowds!

And if you haven’t already registered for Steel Summit this year, it’s not too late to join nearly 1,300 of your peers on Aug. 21-23 in Atlanta. The full agenda and registration details are here.