Final Thoughts
Final Thoughts
Written by John Packard
February 8, 2016
There seems to be little doubt that there is some strength in the cold rolled and coated products markets. The lead times are extended with ArcelorMittal being into May on galvanized according to one of their automotive service centers. We heard from a couple of the conversion mills who told us their orders books were “comfortable” and they were not having issues holding prices at the levels where they feel they need to be.
Steel buyers have mixed opinions ranging from those who firmly believe the domestic mills will raise prices on cold rolled and coated steels. However, just about no one thinks prices will go anywhere on hot rolled steel which still can be gotten within a couple of weeks of placing an order at a number of mills (not all). Buyers point to the shut down of capacity at US Steel and AK Steel and the shifting of production has created some issues. One automotive service center told SMU this evening that they were quoted a $29.50/cwt base on a potential automotive spot order this week. We heard from others that there were base price offers at over $29.00/cwt bases but no one would admit to actually paying that number (yet).
We heard from a large service center earlier this week, “On foreign offers (CR & Galv), I’m not seeing the prices get to the levels where I’d expect broad movement – yet. The domestic mills are falling all over themselves and constantly asking about imports, what the prices are, and whether we’re buying or think we might buy. It appears as though they are trying to determine just where those ranges are, and whether or not they have room to increase further, for CR and Galv. I’d say they are taking a more measured approach than they normally have done in the past, under similar circumstances. Also, I think the mills are a bit perplexed with the historic spread between HR and the finished products, and that too is giving them some pause. I for one think that this spread could be sustained for a while.
Having said this, I think we’ll see a move by the mills to increase CR and Galv soon.”
I found one comment from a mill interesting today, “The spread between hot rolled and cold rolled should be $130 to $140 per ton.” Our source went on to say that it cost their mill approximately $110-$120 per ton to go from hot rolled substrate to fully processed cold rolled.
So, I expect the spread between hot rolled and cold rolled/coated steels to remain in the current range of $140-$160 per ton and perhaps extend as much as another $20 per ton over the short term. As one service center executive put it to us earlier today, “The mills have never been bashful about asking for price increases when they think they can get it.”
I want to thank Aviva Leebow, CEO of Pacesetter Steel as they have once again become our Conference Partner or lead sponsor at this year’s Steel Summit Conference in Atlanta. I also wan to thank Steel Dynamics who will once again sponsor this year’s Networking Party and Magic Coil Products who will also continue as a sponsor at this year’s event. If your company has an interest in becoming a sponsor or an exhibitor at this year’s conference which will be held on August 29-31st please let us know. We have our sponsorship packages available for you to review. You can get more information either online or by sending us a request for more information: info@SteelMarketUpdate.com or you are welcome to contact me at: 800-432-3475.
We are working on a number of interesting items for the next couple of issues of our newsletter. Some of those articles are directly related to questions, comments or suggestions we received as we canvassed the market over the last two days. If there is something out there that you would like for us to cover, a rumor you uncovered that you would like addressed to see if it is true or not or a subject that you think is of importance to the industry please let me know: John@SteelMarketUpdate.com or 800-432-3475.
We checked on one such rumor/question earlier today. We heard that CSN was complaining that the duties they received for countervailing (CVD) were the fault of the Brazilian government. We checked with one of our sources who confirmed that the Brazilian government failed to complete all of the paperwork requested by the U.S. Department of Commerce and that failure was what caused them to be hit. We also learned at the same time that approximately half of all of the Brazilian hot rolled imported into the United States during 2015 went directly to the CSN mill in Terre Haute and not to the trade (was not resold as is).
A note to those of you who will be attending the Port of Tampa Steel Conference next week – I will be there. If you want to connect during the conference please shoot me an email: John@SteelMarketUpdate.com or a text message to: 770-596-6268.
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
It’s once again A Tale of Two Cities in the steel market. Some are almost euphoric about Trump’s victory. Others, some rather bearish, are more focused on the day-to-day market between now and Inauguration Day on Jan. 20.
Final Thoughts
One of the perhaps unintentional perks of being a trade journalist is the opportunity to travel and cover an array of industry conferences and events. Some I've attended have been at fun locations, like Palm Springs and Tampa, Fla. Others have been in more practical locations, like SMU’s Steel Summit in Atlanta and American Iron and Steel Institute (AISI) and Steel Manufacturers Association (SMA) meetings in Washington, D.C.
Final Thoughts
t this point in the game I think what we can say about Nippon Steel’s proposed buy of Pittsburgh-based U.S. Steel is that it will go through, it won’t go through, or the outcome will be something new and completely unexpected. Then again, I’m probably still missing a few options.
Final Thoughts
President-elect Donald Trump continues to send shockwaves through the political establishment (again). And steel markets and ferrous scrap markets continue to be, well, anything but shocking. As the French writer Jean-Baptiste Alphonse Karr wrote in 1849, "The more things change, the more they stay the same." (I thought the quote might have been Yankees catcher Yogi Berra in 1949. Google taught me something new today.)
Final Thoughts
President-elect Donald Trump will officially retake the White House on Jan. 20. I’ve been getting questions about how his administration’s policies might reshape the steel industry and domestic manufacturing. I covered the tumult and norm busting of Trump's first term: Section 232, Section 301, USMCA - and that's just on the trade policy side of things. It's safe to say that we'll have no shortage of news in 2025 when it comes to trade and tariffs.