Final Thoughts
Final Thoughts
Written by John Packard
July 27, 2016
I have been receiving a large number of calls asking my opinion about steel prices and specifically can steel prices remain at the current levels for an extended period of time. The financial community is convinced that the numbers will come down over the next month to two months and that we will see mid $500’s hot rolled by the end of the year. I am being forwarded articles about the weakening of the automotive sales (which is different than production numbers) and that Chrysler will no longer manufacture cars in the United States beginning next year.
I don’t disagree that there will be pressure building and the question will be what will demand be for all of the market segments as we move into 4th quarter and into next year. This will be one of the areas covered in our Steel Summit Conference and we have some big guns discussing the subject: Chris Oakley, Vice President and Regional Manager for the Federal Reserve Bank of Atlanta and Alan Beaulieu of the Institute for Trends Research. They are much better suited than I to make prognostications.
What can I do? I am focusing in on steel buyers and what they are telling me about their business, their buying patterns and what they are hearing from their suppliers. We are looking for cracks in the ceiling and for what will change momentum. Many times the shift in momentum is nothing more than a salesman at “X” mill deciding to cut a deal below market pricing and the word gets out and spreads like wild fire. The executives at the steel mills understand that if they remain steadfast and don’t go hunting for business they will be OK. But, how long can you build a slab inventory or run orders ahead of schedule before the desire to pad the order book becomes irresistible?
I continue to be concerned about the spread between hot rolled and cold rolled/coated which I think will be a big problem for the mills in the long run. The foreign numbers on coated steel continue to be competitive – even though they are $3-$4.00/cwt higher than they were just a month or two ago – because of the widening of the spread.
I would be very interested to hear from buyers and executives who are dealing with these issues on a daily basis. How many of you are looking not only elsewhere for steel but more importantly who is out there looking to move parts or products overseas because of this spread? You can reach me at: 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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