Final Thoughts

Hearing foreign hot rolled offers into the Gulf are $500 to $540 with the Turkish mills being reported as being the low offers at this moment. We heard from one foreign supplier that they were not willing to go below $530 at this point. This is what the mills want to begin to see – resistance on the part of the foreign mills not to go below a specific point.

I spoke to a number of buyers about the possibility of dumping suits to be filed in the near future. A couple of the larger service centers told us there have been no conversations about dumping out of the mills right now. They expect the subject to be brought up during the earnings conference calls which begin on the 27th of January with AK Steel and Nucor but don’t expect there to actually being any dumping suits brought any time soon. A manufacturing company told us (regarding possible dumping suits), “There are a lot of leaks in the dike and plugging one hole is not going to fill it up.”

Timna Tanners of Bank of America Merrill Lynch put out her weekly note to her clients on Monday morning and in the note she spoke about the impact lower hot rolled prices would have on U.S. Steel EBITDA. At $625 per ton Tanners forecast US Steel EBITDA to be $1,275.6 ($M), at $550 it drops to $883.0 and at $500 it drops to $713.0.

A large service center with whom I spoke this afternoon pointed out that even though iron ore and scrap prices are down the steel mills need volume and the right mix of products. With the demise of the energy sector this executive told me that the mills are resigned to the fact that the first half 2015 is not going to be a good steel market for them.

When I spoke to buyers about demand the vast majority of them reported demand as being good – especially in automotive, appliance and a rising commercial construction order book. The issue right now appears to be inventory related and the need by many to reduce the inventory that they have on the floor. One of the mills with whom we communicated earlier today felt that the inventory correction for OCTG would take about 60 days to correct itself.

Zinc spot pricing on the LME close down today and last traded at $0.9276 per pound according to www.Kitco.com.

As always your business is truly appreciated by all of us here at Steel Market Update. Extended forecast for Charleston early next week: Low to mid 60’s and sunny… We have room for one or two more people in our Steel 101 workshop should you have people who would benefit. If you have questions please contact me in my office: 800-432-3475.

John Packard, Publisher