Final Thoughts

Final Thoughts

Written by John Packard


A note that SMU adjusted our Price Momentum Indicator to Lower from Neutral on Friday. I have explained 10 of the reasons why (and there are more) in the first article in tonight’s newsletter. If you would like to make comments, feel free to reach out to me at John@SteelMarketUpdate.com.

I will be working on foreign steel offers early this week as there have been a number of comments from both buyers and sellers of steel about the high prices associated with foreign right now. I will be working on trying to explain what that means and what it might mean for domestic steel prices in the months ahead. The market has been waiting for a correction of foreign steel imports, but it has not happened despite antidumping and countervailing duties. It has not happened due to the threat of Section 232 (in fact, I believe the Section 232 investigation has worked against the domestic steel mills). Logic says if foreign prices are higher than domestic, that should create an environment that favors domestic steel mills. The question is, exactly when?

Because one of the other things I have been hearing is from the OEMs who have gone out and protected themselves, buying extra inventory and/or taking advantage of their domestic contracts. Will the domestic mills be able to raise prices should there be less first-quarter demand than normal?

If you have opinions on these subjects, please contact me at John@SteelMarketUpdate.com or 800-432-3475.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher

Latest in Final Thoughts

Final thoughts

SMU’s sheet prices firmed up modestly this week, even as CME hot rolled futures declined. What gives? My channel checks suggest that demand remains stable and that buyers have returned to the market following new HR base prices announced by mills earlier this month. I’m looking forward to seeing whether lead times, which have stabilized, will start extending. SMU will have more to share on that front when we release updated lead time figures on Thursday. As for HR futures, what a reversal! As David Feldstein wrote last Thursday, bulls expected mill price increase announcements. And we briefly saw the May contract climb as high as ~$1,000 per short ton (st).

Final thoughts

There’s that concept from Adam Smith we all learn about in our Econ 101 classes: The Invisible Hand. A simple Google search will provide a refresh, but if memory serves I would classify it as something akin to “the market is magic” or “the market’s gonna market.” Today, obviously, we live in a mixed environment. There are a lot of hands out there, and they’re not too difficult to see. In this election year of 2024, one of the most visible hands out there probably belongs to the federal government.

Final thoughts

SMU’s price for hot-rolled (HR) inched lower this week. I wouldn’t be surprised, however, if we start to see prices and lead times move higher in the weeks ahead. The modest declines in HR this week are probably the result of lingering deals cut at “old” prices, as sometimes happens after mill price increases. But those deals will probably be out of the market soon if they aren’t already. So why do I float the idea of higher prices? Some big buys have been placed. It reminds me a little of what we saw last fall, when people restocked in anticipation of higher prices once the UAW strike was resolved.