SMU Market Chatter

Market Chatter This Week

Written by Becca Moczygemba

On Monday and Tuesday of this week, SMU polled steel buyers on a variety of subjects, including steel prices, demand, inventories, imports, the UAW strike, and what people were talking about in the market.

Rather than summarizing the comments we received, we are sharing some of them in each buyer’s own words.

We want to hear your thoughts, too! Contact to be included in our questionnaires.

Are steel prices near a peak? If not, when and at what price level do you think prices will peak, and why?

“I think more price hikes are to come. The mills are waiting for the dust to settle on UAW contracts.”

“We aren’t at a peak yet, but we’ve definitely seen the immediate-term bottom. I do expect we’ll see more increases coming this week, though.”

“No. Mills will be able to go higher by virtue of very low inventories.”

“Not yet. The UAW strike is over and there’s still a lot of capacity offline.”

“No, pricing will not peak until December when all the service centers receive their tonnage ordered in September and demand is weak.”

“Spot prices will rise through the balance of the year, possibly reaching $900, before retreating late Q1 – early Q2’24. While the UAW strike settling will return demand, I don’t think the overall supply-demand picture warranted sustained higher prices.”

“Prices will peak in January with hot roll at $1,000.”

“Not for plate. The expectation is for them to continue to move down into the first half of 2024.”

“I feel we will see a peak later in the first quarter of 2024. It seems things are currently all in the favor of HRC mills, but I question what 2024 demand is going to be like.” 

“Prices are just starting to climb. We should expect aggressive pricing at least through year’s end.”

“I thought they were, but now with all automotive reaching a tentative agreement with the UAW, I’m expecting auto to come back strong. Contract buying will be heavy on top of already long lead times. I expect $1,000 HRC steel to be announced by Thanksgiving.  So that will be the peak and run into March lead times before buyers can push back.”

“I think they will peak in December.”

Is demand improving, declining or stable, and why?

“Stable to improving for us.”

“Thus far, demand is stable.”

“Demand is improving slightly.”

“Demand is remaining stable. I honestly didn’t see much impact from the UAW strike.”

“Demand will improve for a few months as auto returns and there is some restocking. I do sense that large service centers have already made significant deals at lower base prices.”

“Now that the UAW strike looks to be over, I think we will see a reduction in shipments, as we have been building inventory the last six weeks.”

“For our products, customer demand is declining due to seasonality.” 

“Demand is somewhat stable. Automotive will pick up very soon now that the strike is over.”

“Demand is improving. Buyers are moving off the sidelines and locking up Q1 and 1H.”

“Demand is now improving. Buyers are coming off the sidelines and expect auto to pick up quickly.”

Is inventory moving faster or slower than this time last year – and why?

“Inventory is moving faster.”

“About the same for us.”

“Inventory is moving as forecasted.”

“A little slower.”

“It seems to be moving the same, granted we aren’t really stocking much inventory.”

“Faster. Low inventories are creating a frenzy.”

“Inventory is moving faster to get ahead of price increases.”

“For us faster as we focus on turns.”

“It is about the same as last year.”

“Still moving a bit slower.”

“Slower, customers are buying less.”

“Inventory is moving quicker this year vs. last year when buyers were destocking.”

“Slower because of interest rates.”

Are imports more attractive vs. domestic material? Why or why not?

“They will be depending on how fast domestic mills push pricing up.”

“Some are because of the rapid rise in our prices, but imports are going up as well.”

“Somewhat attractive on price for today, but hard to say when considering a lead time of early 2024.”

“They certainly are getting more attractive. With domestic pricing shooting up too high, too quickly (per usual) and then lead times supposedly stretching out as well.”

“Imports are too far out to be a factor. Currently April arrival.”

“Imports are more attractive, but it will be three months before product lands.”

“Imports are gaining momentum, especially in plate as US remains highest-cost market.”

“Import prices are attractive but not for April arrival (plate only).”

“From a pricing standpoint, yes, but long lead times are a concern.”

“Imports are NOT attractive due to price, lead time, suspect quantity, and risk factors.”

Has the UAW strike had an impact on your business? Why or why not?

“I think the impact is yet to come.”

“It hasn’t affected our business and I’ve been surprised it really hasn’t on the steel market, either.”

“Not yet.”

“None other than setting a tone in buyers’ minds.”

“Yes, definitely slowing down the last 10 days at the tier one and tier twos.”

“None except for raw material pricing.”

“No direct as we are more closely aligned with the construction market. Tangentially, yes, as our spot prices for HRC are volatile to the market.”

“Very little. I expect to see a small slowdown in November to get inventory right-sized.”

“Not directly for our business, other than the impact it is having on prices.” 

“A few customers slowed down.”

“The latest round of strikes would have been very impactful. But now with tentative agreements reached, that will be erased.  Prior to the last round of strikes, it had been a minimal impact.”

“Not yet and shouldn’t as it draws nearer to settling.”

What’s something that’s going on in the market that nobody is talking about?

“Maybe the return of AHMSA? I haven’t heard a peep about that in a bit.”

“Raw material costing out of India and Thailand.”

“Value-add arms race. Evraz sale.”

“I’m not confident in the supply/demand balance in 2024 and feel we will see a significant decline in HRC pricing later in the 1st quarter.”

“Mills forcing the issues after a rough Q3. They won’t allow a repeat of last year when they were breaking even/losing money for two. They have collectively decided one quarter of decline is all they will allow and will limit supply to force the issue if demand isn’t there.” 

“Availability is extremely limited. Buyers are getting shut out from their traditional supply chain. Spot buyers are not going to be happy.”

Becca Moczygemba

Read more from Becca Moczygemba

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Steel market chatter this week

SMU surveyed our market contacts this week about steel prices, demand, and the overall marketplace. Below are some of the buyers' responses in their own words to help you get a feel for current and future market conditions. Demand is a big topic of discussion currently. Is it steady, falling, or on the upswing with summer construction heating up? As you can see from the answers below, it depends on who you ask. One buyer’s response sums it up pretty well: “I still see the marketplace as soft/stable with some segments busy, while others tread water.”