Final Thoughts
Final Thoughts
Written by John Packard
August 10, 2015
With the filing of the hot rolled trade case (which was expected by almost everyone in the industry and the date had been leaked long ago) we now have all flat rolled products followed by Steel Market Update involved. It will take time to sort through all of the data and for the process to work its way through the US Department of Commerce and the US International Trade Commission. We are working on a number of articles on the subject including the possible negative impact the HRC case could have on a couple of domestic steel mills, reaction from the steel community, reaction from the trading community and what will happen with prices (and supply) over the next few weeks, months and into next year. We will address these issues over the next few days – at least to the best of our ability.
I am somewhat surprised that there are a number of service centers in particular who have a negative view of the market and prices. A very large hot rolled service center told SMU today, “Unless more domestic capacity comes off short term there is no concern on pricing. Inventories are still high.” This same service center told us that a “bull case” market would only see HRC prices rise by $25 per ton from today’s levels. The bear case scenario has prices flat out until 2nd Quarter 2016.
Another service center executive told us, “The domestic mills are going to hold on for dear life here and wait for the expected upturn from the trade suits.” This same executive told us, “It’s got to be scary for the OEM’s with the domestic mills taking so much foreign availability out of the market.”
We heard from a number of steel people with whom I spoke today that our Steel Summit Conference couldn’t have been timed any better. The opening of the conference is September 1st which also is the date that the USW contract expires with US Steel and ArcelorMittal. With the dialogue heating up between the USW and mill negotiators there may be something to discuss during the course of our two day conference (plus networking on Monday evening the day before the conference begins).
We have a strong program all the way through the two days but we end on a very strong note with Dan DiMicco who is then followed by our Government Regulation and Trade Panel with Lewis Leibowitz, Richard Chriss and Kevin Dempsey with me making some final remarks as we prepare to bolt for the airport (5 minutes away). Don’t book too early a flight out on Wednesday as you will want to see both Mr. DiMicco and our Trade Panel.
If you go to our Steel Summit Conference home page you will see that we have updated the list of companies who will be attending this year. Registration is still open and it is looking like we will exceed last year’s registrations by 80 to 100 people. There actually is an outside chance that we could sell out this year’s event (300 people).
If you are registered you should have already downloaded our Steel Summit App. I have already heard a number of very positive comments about how easy the App is to use and how much information is already in the App. One of the most important being the registration list of all the attendees. We have set this conference up to be one of the most productive networking environments you have ever experienced.
Our room block is sold out as is most of the rooms in the Atlanta Airport Marriott Gateway Hotel. There is a Springhill Suites Atlanta Airport Gateway Hotel located across the street and close to the convention center.
If you can’t make it to our conference please let your suppliers/customers know about it as they may want to attend in your place.
If you are really bummed out about missing the conference you can always attend or send someone from your company to our next Steel 101 workshop which will be in Davenport, Iowa on October 6-7th and we will tour SSAB. All of the Steel 101 instructors will be at our conference and will be available to speak about the program with you.
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
Whether it’s the twists and turns of the presidential election, the U.S. Steel deal, or just what’s happening with the movement of steel pricing, there has been no shortage of stories for us to cover.
Final thoughts
Cleveland-Cliffs is seeking $750 per short ton (st) for hot-rolled coil. That’s $20/st above where the steelmaker had been. It’s also $30/st above Nucor, which is at $720/st this week. We've seen prices increase incrementally this week. SMU's HR price, for example, stands at $690/st on average, up $5/st from last week. The questions now are whether a number well above $700/st will stick, whether other mills will follow Cliffs, and whether there is enough demand to support higher prices.
Final thoughts
We got a little flack for adjusting our sheet momentum indicators to neutral last week. To be clear, we didn’t adjust them to lower. Part of the reason we moved them to neutral was because there are some unusual cross-currents in the current market. On the news side, you could make a case that there should nowhere to go but up.
Final thoughts
I think all of us know that sometimes courtships go wrong. A misplaced word or deed and soon things can go sideways, and not in the prices sense. Such could be the case with Japanese steelmaker Nippon Steel’s play for U.S. Steel.
Final thoughts
We’re starting to see some impacts of the big trade case filed last week against imports of coated flat-rolled steel from 10 nations. Namely, we’ve heard that a range of traders have stopped offering material from Vietnam. An alleged dumping margin of nearly 160% will do that. Especially amid chatter of critical circumstances.