SDI's Millett bullish on HR demand this year

Though he quipped that “I never do well in Vegas,” he said that, directionally, “I do believe, again, that the underlying structural demand is there.”

Millett said that looking at the last 18 to 24 months of hot band pricing cycles, “they have not been driven by demand.”

“They’ve been driven by emotion, whether it be the threat or the anticipation of high interest rates, inflation, recession, and all these sorts of things,” he added. “They’ve been emotional pivots as opposed to demand for us.”

He noted that “everyone gets a little excited by maybe a little backing off of hot-band pricing here of late. But for us, flat roll continues to be very, very solid.”

Though the macro indicators may not be overly constructive right now, Millett said, “the order input rate in January for us has been incredibly strong.”

He sees the supply chain in general as relatively tight right now.

“And imports are not a material factor today and won’t be,” Millett said. “We’re booked out for coated and pre-paint. It’s very, very strong for us.”

Looking at the emotional component of recent cycles, he mentioned a “steep climb.”

“You have exuberance, hence to overshoot the market a little bit, and it sort of retrenches itself a bit. And I think that’s where we are today,” commented Millett.

 He said this is not a signal of structural underlying demand like it used to be “because there’s so little spot material transacted today.”

“Just because you have a slight erosion in hot band price, it doesn’t mean to say that that’s reflective of where the demand is. So for us, demand is, as I said, very, very solid throughout our sheet mills,” Millett added.

SMU’s HR price is $1,000 per short ton (st) on average this week, down $25/st from the previous week and off $45/st from the start of the year.