Final Thoughts

Earlier this week, we officially broke the attendance record we set last year. Numbers continue to rise.

More than 1,300 will be there when the event kicks off on Monday, Aug. 21, at the Georgia International Convention Center in Atlanta.

I also want to give a big shoutout to everyone at SMU and at CRU who has made this achievement possible. It’s been a real team effort.

While Steel Summit is less than two weeks away, it’s not too late to attend. Check out the agenda and register here if you haven’t already!

Automotive Contract Negotiations

Second, I want to address some communications we’ve received about SMU’s coverage of automotive labor contract negotiations.

For starters, let me just say that SMU has no stake in the outcome of contract talks between the unions and automakers Ford, General Motors, and Stellantis. Nor are we trying to stoke pessimism in the market.

Also, we’re not trying to handicap the odds of a strike. We’re trying to present a range of opinions, so that you can make the best decisions for yourself and your company.

Also, I say “unions” above because it’s not just negotiations with the United Auto Workers (UAW) union that are underway. As Ethan Bernard reports in the newsletter today, talks are also taking place between Unifor, which represents union auto workers in Canada, and the “Big Three.”

The UAW contract expires at 11:59 pm ET on Sept. 14. Unifor’s contract expires on Sept. 18.

Again, I don’t know whether there will or won’t be strikes. There are good cases to be made on all sides of the argument. I raise the issue because it’s one I think our readers should be aware of.

Price Dynamics

As I’ve said before, a strike or lockout – unless it is a short, mostly symbolic one – would not exactly help demand. There are also risks if there is no strike.

Last year, I know some of you stocked up more than you normally would have on fears of a strike or lockout at union-represented mills in the US and Canada. Ultimately, there were no disruptions. The USW reached agreements with Algoma, Cleveland-Cliffs, Stelco, and U.S. Steel.

But fears of a strike might have resulted in some demand being pulled forward. That might, in turn, have contributed to the overhang in supply (and the lower sheet prices) that we saw in October/November ‘22.

We might be seeing the opposite dynamic this year. I’m going to stop short of calling a buyer’s strike. That said, it does seem that some of you are buying less than you ordinarily would. Perhaps it’s concerns about automotive contract negotiations. Or it’s uncertainty in general about demand heading into fall and early 2024.

So I should also highlight, as some on the mill side have pointed out, that being conservative can be risky too. If there is no protracted UAW or Unifor strike, then the risk is the opposite of last year during USW talks. Companies might be caught short inventory. That could result in buyers jumping back into the spot market at the same time, which in turn could lead to sharply higher sheet prices.

Imports

We saw something similar in Q1. Import volumes declined along with lower domestic prices. Many assumed that US prices would continue to move lower in the first quarter. That assumption turned out to be wrong when Mexican steelmaker AHMSA unexpectedly stopped producing and when the US economy proved more resilient than expected.

I also mention imports because, as Dave Schollaert notes, US HRC prices and those for imported hot band are nearing parity, once you factor in freight. That’s a big reversal from what we saw in most of the H1’23. Namely, US prices way, way above those in the rest of the world, something that attracted imports.

Will US prices hit parity with prices abroad? Might the US, as we tend to do for very brief periods, go below prices overseas? Or will US prices again shoot higher?

Let me know your thoughts. In the meantime, thanks again to all of you for your support of Steel Summit and Steel Market Update.