Steel Products

Final Thoughts

January 21, 2013

Steel Market Update was founded because I felt the quality of information (as well as the sourcing of information) was not up to the standards I felt necessary when I was selling steel. I can remember contacting one of the periodicals and asking them why they were referencing prices in a certain way when the mill I represented was nowhere near those levels. As a salesman it was quite frustrating – and I can relate to the frustrations both sales and purchasing (and management) carry around with them on a daily basis.

However, when I was selling steel I had it easy compared to the craziness which exists in today’s markets. With the introduction of new players on the supply side, combined with index based deals run astray and the collapse of the financial system as I knew it prior to 2008/2009 – well, things are not quite as easy to read as they once were.

These factors and others make it even more important to read things carefully to insure you understand the message being sent. In the last issue of SMU one of our manufacturing sources was discussing with SMU three mills being out in the market offering HRC at $560-$580 per ton with the expectation that at least one of these mills (and smart buyers know who we are talking about) will fill their book and then raise prices.

I received an email from the president of a large service center group suggesting, “You have a tendency to talk down markets sometime.”

My response back – and what I want our readers to understand – our SMU Price Momentum Indicator is at Neutral – suggesting we believe prices could move in either direction over the next 30 days. Secondly, the manufacturing company we quoted was commenting how he thought that a price announcement was coming and suggested the fact that one mill in particular was looking for some quick beefy tons suggested to him they were getting ready to make a move higher.

I also pointed out a number of analysts – I mentioned two who I feel are professional – are also suggesting that the domestic mills may only be days away from making a price announcement.

The same executive, in his email to SMU, reported he did not see major producers in the U.S. at the $560 level but the numbers have been transacting with a “6” in front of it or, “…Perhaps when you consider freight on a delivered basis you get to $590 or so.”

In this case our SMU price range should actually be $10 per ton lower than what we reported last week…

I will have more survey results in Tuesday’s issue of SMU.

For those of you on the West Coast I will be attending the AIIS West Coast dinner this Thursday in Long Beach.

For those attending the AHR Expo in Dallas next week – I will be there as well on Monday and Tuesday.

If you would like to try to schedule some time with me in Long Beach or Dallas you can reach me by email at John@SteelMarketUpdate.com

As always your business is truly appreciated.