Final Thoughts
Final Thoughts
Written by John Packard
December 5, 2016
I am sitting in Colorado Springs, Colorado after having spent the last few days attending the HARDI annual conference. I have been a member of HARDI and have participated in their steel committee for many years. After I stopped selling steel and began Steel Market Update as my main focus I was invited to remain a member and to continue to provide value to the group’s monthly conference calls. For a number of years I have been a speaker at their annual conference and we had a full house again this year as the wholesalers wondered where the galvanized steel market is going from here.
My opinion is that all of the cards seem to be in the hands of the domestic steel mills. We are seeing higher commodity prices around the world. We are seeing higher steel prices around the world as well. In another article in tonight’s issue one of our Chinese sources talks about HRC prices in the domestic market now being at $500/metric ton ($454 net ton). We learned from the wholesalers who are buying foreign steel that foreign prices on galvanized into the U.S. are also increasing and supply is becoming more limited with China, India (except Uttam), Vietnam and many other countries out of the market due to the AD/CVD suits. Zinc was trading just below $1.30 per pound earlier today (before added costs the mills have to pay to get delivery) and there is a concern about the possibility that coating extras may be revised early next year. A major concern for a galvanized buyer.
So, I think steel prices have a ways to run from here and I am expecting that with the strength of scrap and my sources telling me scrap has more to go come January, I am expecting the domestic mills to take prices up one more time before the end of the year. That is my opinion and I intentionally don’t forecast prices. So, I don’t know how high prices may go from here. I just think it may be more than what people believe based on what they are seeing for demand right now.
At the HARDI steel meeting the president of one of the steel service centers belonging to HARDI was in the audience and did an excellent job of framing the market in 2014-2015 (when we went through the major slide and then a run up in prices before dropping again). He told the group that high inventories and weak commodity prices were not aligned with what the steel mills wanted to happen. Now, we have a market with tight inventories, rising commodity prices and restricted supply – the trifecta of a three legged stool. Add in stronger demand…(?)
A note about our upcoming Steel 101 workshop in Huntsville in January. We are now SOLD OUT. If you are interested in this particular workshop please contact me at: John@SteelMarketUpdate.com and I will work with you to see if I can make room. If not, we will be adding another workshop in the early Spring 2017. More details to come.
My apologies as I understand that our emailing system used to send out our newsletters failed last night. Our developers have been working on the fix and we expect that Thursday’s’ issue will go out on time.
As always your business is truly appreciated by all of us at Steel Market Update.
John Packard, Publisher
John Packard
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