Final Thoughts
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Final thoughts
Written by Michael Cowden
April 4, 2024
Sheet prices continue to inch higher. That’s a welcome development for many. But it’s also a far cry from the price surge many predicted about a month ago.
Remember the theory that supported a spring surge: Sheet prices would soar on a combination of mill outages, stable-to-strong demand, restocking, mill price increases, and (potentially) trade action against Mexico as well.
Futures markets went bananas, and it seemed like a foregone conclusion that there would be another wave of price increases before Good Friday.
Some of that happened. We did see price increases in early March. We saw an end to the destocking that characterized January and February. And we saw big buyers return to the market last month.
To what extent did a restock happen last month? We’ll have a better idea when we release updated service center inventory data (to our premium subscribers) on April 15.
To be fair, we did see another round of price increases around the holiday. Cleveland-Cliffs announced a target price of $900 per short ton (st) for HR on March 27. Some mills have quietly continued to increase prices. But none (that I am aware) of have made public announcements, despite persistent rumors that one might be coming soon.
Well, none have made a traditional announcement. Nucor made a very big announcement on Thursday afternoon. It said it would post spot HR prices beginning on Monday, April 8, and thereafter every Monday. The company will publish not only weekly spot HR prices but also lead times – between three and five weeks.
Will the market accept a mill-published HR price? How will other mills react to both Nucor prices and their lead times? It will be interesting to watch. Because my guess is that a change in sheet pricing strategy of this magnitude will ruffle some feathers.
I’m not sure what the impetus for the change was. But there is the matter that Nucor and Cliffs haven’t seen eye to eye on prices lately. Cliffs announced a price increase on Jan 3. Nucor didn’t follow. And then began a downward drift in prices throughout January and February.
More recently, Nucor didn’t go as high as Cliffs in that round of increases in early March. Nucor (and ArcelorMittal) went to $825/st for HR. That was lower than the $840/st Cliffs sought. (You can keep tabs with our price increase calendar, which is here.)
Many of you tell me that the spot market continues to be mostly in the mid/low $800s per ton, something reflected in SMU’s latest price ranges. I’m not going to weigh in on where Nucor will land on Monday. But, broadly speaking, where do sheet prices go from here? Is there room for another round of price hikes before lead times stretch into the traditionally slower summer months?
It looks like scrap prices will be sideways in April. So don’t expect a catalyst for an upward move from domestic raw materials. Also, I think the market has mostly baked in ongoing or upcoming outages – so I don’t think anything but an unplanned outage would catch the market by surprise.
What about the fundamentals – supply and demand? As far as supply goes, last month turned out to be a big one for imports. The US was licensed to import 968,446 metric tons (mt) of flat-rolled steel in March, according to government license data updated earlier this week. That’s up 25% from 775,828 mt in February, and marks the highest point for flat-rolled steel imports since 974,006 mt in August 2022 – or 19 months ago.
That leaves demand. It’s been surprisingly resilient for quite a while now. Will it continue to be? I don’t have the answer to that. How about you, what are you seeing in the markets you serve? Also, how do you think the market will react to Nucor’s new pricing strategy? Let us know at info@steelmarketupdate.com.
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Michael Cowden
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
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Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
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Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
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Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
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Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!