Final Thoughts
Final Thoughts
Written by John Packard
January 21, 2015
I was conversing with a consulting friend who reported to me that steel prices are taking a beating in Europe. He referenced hot rolled prices being offered out of Russia into Europe for 365 to 375 euros. He also reported that the sales of the Italian steel mill, ILVA would not succeed and the mill will be run by the government. Our source reported that just like the U.S. there is just too much capacity in Europe.
I got an email from Diann Scott, Senior Purchasing Manager for Kloeckner Metals and one of the attendees at our Steel 101 conference we just held in South Carolina, “…this was the best class/seminar I have ever attended on steel… I would recommend your seminar to anyone.”
Next Steel 101 workshop will be in Chicago with a tour of the NLMK Indiana steel mill.
Another thank you to our Nucor hosts at Nucor Berkeley. The tour was great and very helpful to those who were learning about the steel making and rolling process for the first time. I learned a lot from the metallurgist who took my group out into the mill. I was impressed with the equipment, knowledge and dedication of the Nucor employees.
Peter Wright, one of our Steel 101 instructors, metallurgist and consultant to SMU and long products producer Gerdau, got a question from one of our former Steel 101 students regarding the price of scrap and its relationship to WTI oil pricing. The graph below gives you a long history of WTI and shredded scrap pricing and you can clearly see there is a very high correlation between the two. Based on Peter’s analysis scrap prices are about $100 per gross ton too high at this time…
By the way, for those of you who are not aware, the United Steel Workers union represents union workers at about 64 percent of the oil refining capacity in the United States. Their contract expires on February 1, 2015 and, according to the USW, the union is looking for double the pay raise they received in their last contract. The starting pay is $37.50 per hour. Keep an eye on this one.
The union workers should be aware of some of the statistics I saw this evening in the Armada Executive Intelligence Brief: U.S. crude oil inventories hit a 13 year high. Oil inventories grew by 10.1 million barrels over the past week. Gasoline inventories were up 0.6 million barrels, well above the upper limit of their historical average. Finally, production volumes were up 4.9 percent over one year ago.
Ray Culley and I continue to work diligently on a Senior Managers and Executive level workshop. We are developing the agenda and working on inviting instructors/speakers for what we think will be an excellent two-day program. One of the keys is we want this program to provide actionable information on a variety of topics. We will have more on this program soon.
I am also working hard on our 5th Steel Summit Conference which will be held in Atlanta on September 1 & 2, 2015. Block out the dates on your calendar.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
Sometimes new presidential administrations hit the ground running. No time for change like the present. And sometimes new administrations blast off on a SpaceX rocket bound for Mars. There’s a big universe, and we’ve got a lot of flags to plant. Such seems to be the case with the new Trump administration.
Final Thoughts
What’s been the impact of tariff threats on prices and demand? In short, not much – or at least that was the case when I was writing this column on Sunday afternoon. Spot activity for Canadian material, for example, has been put on hold over the last few weeks while the market waits to see what the new tariff landscape might look like.
Final Thoughts
Next Monday marks the start of the second Trump administration. The limbo we’ve been living in since Election Day in early November will finally come to an end. What better way to take a look at what’s coming up in Washington, D.C., than a conversation with Steel Manufacturers Association (SMA) President Philip K. Bell. He […]
Final Thoughts
It’s another week of big headlines and ho-hum pricing moves – which is to say the start of 2025 is looking a lot like the end of 2024. Scrap has settled up $20 per gross ton (gt). Steel prices, however, were a soft sideways this week. Chalk it up to uneven demand and abundant supply. And while we’re not aware of any major outages, some of you tell us that you’ve lost some shipping days here and there because of the recent cold snap.
Final Thoughts
I wrote in a Final Thoughts a few years ago that it seemed all the swans were black. More recently, I’ve been asked by some of you what the wildcards are for 2025. You could probably make the case that all the cards are wild now.