Final Thoughts
Final Thoughts
Written by John Packard
January 22, 2016
I will be at the AHR Expo on Monday of this week (January 25th). I will only be there for one day due to other conflicts on my schedule. If you are planning on attending and would like to meet with me, the best way to find me is either through text or a phone call: 770-596-6268. I should be there right around 10 AM and will be leaving shortly after the show closes for the day.
For those of you who have an interest, we hit December steel service center inventories and shipments and our Apparent Excess forecast. We will share our revised Apparent Excess/Deficit forecast with our Premium level members early this week. Our last forecast called for service center inventories to be balanced by March. In light of lead times it is no surprise to us that the distributors are actively ordering cold rolled and coated steels.
Here are some of the other items covered in last week’s flat rolled steel survey:
Is there a limit as to how far the domestic mills will be able to push (and collect) higher prices? Yes = 88%, No = 8%, Other = 4%.
Manufacturer’s trend for purchasing more, less or the same amount of steel as they did one year ago has been changing going back to December 2015 and continuing to improve (buy more steel) through this past week.
Service centers are in sync with manufacturers as distributor trend has broken the negative trend regarding their customers releasing less steel than they did last year. However, we are not yet seeing the percentages improving for those reporting their customers as releasing more steel. The data has been relatively flat over the past three months.
We also look at the pace of new orders that are going through the service centers. That trend has also radically changed over the past 30 days.
We have been watching manufacturing and service centers buying history since our survey began in late 2008. We have seen a dramatic change in the percentage of service center respondents reporting their company as engaged in a reduction in inventory compared to where they were just a couple of weeks ago.
We have reported in the past about how both manufacturers and service centers view SC spot prices into their customers. Our survey has accurately predicted that price increases would happen based on what we call distributor “capitulation.” Capitulation is that point in time when 75 percent or more of the distributors are lowering prices in an effort to dump high-priced inventory. On the flip side we can also predict if price increases are going to stick based on the percentage of service centers who are raising prices (thus supporting the increases). There has been a distinctive change in the data over the past few market analysis we have performed.
Our analysis also goes to trading companies, mills and toll processors as we try to understand the flat rolled markets better. Traders told us that foreign prices are starting to rise compared to one month ago. That is a change in the trend.
Traders still believe foreign prices are at levels where business can be transacted.
The trade suits have/have not affected trading companies ability to quote and service U.S. customers. They are also offering steel from countries not impacted by trade suits.
Our Premium level members have access to all of this data every time we perform a new market analysis (twice per month). If you would like to learn more about upgrading your account to the Premium level please contact me: 800-432-3475 or John@SteelMarketUpdate.com.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
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Final Thoughts
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Final Thoughts
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Final Thoughts
We surveyed many of you this week and asked what you wanted to see from the new Trump administration. Responses were varied but fell largely into three groups: tariffs and trade policy, the Nippon-U.S. Steel deal, and those who are concerned about too much government sway in steel. Some also expressed hope that President Trump would continue the infrastructure spending that began under former President Biden.
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.