Final thoughts

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.