Final thoughts

But lead times aren’t galloping away like some of the more bullish corners of the market might have hoped. And those for cold-rolled and coated products are largely unchanged.

Lingering summer doldrums?

Also, while some mills are less willing to negotiate lower prices, steel buyers tell us that most remain willing to cut a deal to bring in an order.

That’s an improvement from a few weeks ago – when it seemed like everyone was willing to slash prices. But it’s not the sharp decline in the negotiation rate that we’ve seen in the past when price hikes have gained traction in the market.

Basically, the price hikes we saw in late July have succeeded mostly in stabilizing the market. And the modest drop in the negotiation rate looks more like a round of price hikes in the summer of 2023. That one “stopped the bleeding” or “slowed the slide.” What we’re not seeing is the negotiation rate plunge like it did last fall, for example, when multiple rounds of price hikes stuck and sent tags soaring higher.

Meanwhile, as Estelle Tran notes here, service center sheet inventories remained high in July – slightly above May-June levels and well above July of last year. What does that say about demand?

We’ll have more granular data available on that when we compile the results from our full steel market survey for our premium members on Friday. (Btw, if you’re not a premium member, that survey is a good reason to consider upgrading.) My best guess in the meantime is that demand is not great, but not terrible either. (I realize that blanket statement might not fit everyone.) So there is no obvious catalyst for prices to move sharply higher or sharply lower.

I mean, it’s great that retail sales are up, for example. That probably means talk of a US recession is overblown. But it’s not exactly comforting to see China’s largest steelmaker saying that “winter is coming” for steel demand.

And on the raw materials side, as SMU’s sister publication Recycled Metals Update (RMU) notes, Turkey is contending with low-priced Chinese billet. Turkey is a large destination for US scrap exports. And weakness in the Turkish market is not a great sign if you’re hoping domestic scrap markets will settle higher in September.

And what about those Sept/Oct outages at US sheet mills? Some had hoped the primary result would be sharply higher sheet prices and longer lead times. Could it instead be pressure on scrap prices next month?

By the way

By the way, I want to give a shoutout to CRU, our parent company, for some news headlines that SMU might not otherwise have had, given our focus on North American flat-rolled steel markets.

Case in point: The US Defense Department is investing significantly in steel for artillery at Metallus (previously known as TimkenSteel). When was the last time you saw a headline like that? And what does that tell you about the state of global affairs?

Also, when was the last time you saw a headline about someone easing import restrictions in our more protectionist/regionalist times? That’s just what the UK is doing as it shuts down blast furnaces a few years before starting up new EAFs to replace them.

It brings up an interesting question, one I’ll probably be asking at Steel Summit. The US and Europe disagree sharply over the specifics of decarbonization. But both intend to limit imports of steel from countries with more pollution. Could that create at least a temporary opportunity for US mills, which sport low carbon footprints, to export not just scrap but also finished steel across the Atlantic?

SMU Steel Summit

So, what’s the good news – what numbers are still going up and to the right? Attendance at the 2024 Steel Summit! We’re at nearly 1,400 and closing in on another all-time record.

You can see the latest agenda and register here. We’re looking forward to seeing all of you Aug. 26-28 in Atlanta. We don’t care whether you get there by gas guzzler, EV, plane, or a midnight train to Georgia.