Final Thoughts

November 8, 2017

The expectation, even among the naysayers, is there will be a bounce in flat rolled prices once lead times reach the end of December and into the New Year. The expectation is that the domestic steel mills will raise prices in the coming days. We have heard rumors that the first mill to move may come as early as next week.

One steel buyer told us that the first increase back in October was to put a bottom on the market and to then hold on until lead times get through the end of the year. With hot rolled lead times at three to six weeks, we are getting close. Cold rolled and coated lead times should be a week or two further out. Some of the mills are already sold out for the year. Others are getting close.

A good example is NLMK USA where the Portage steel mill, which SMU will be visiting in March with our Steel 101 workshop, is quoting their HRC lead times as being the week of Dec. 25, the last week of the calendar year (with limited tonnage available). Their Farrell facility, which works from slabs, has HR out two to three weeks, but cold rolled and galvanized are in mid to late December.

Nucor Berkeley is quoting mid to late December on hot rolled, and most cold rolled and coated products are already into January promise dates. This puts Nucor in a good position to potentially be the first to come out with the next price increase.

Of concern is what’s happening in the rest of the world. If prices are weakening abroad, will that bleed into the U.S. markets come early next year?

Hot rolled appears to be the strongest product right now. The domestic mills are vulnerable on cold rolled and coated because of the wider spreads (which we have talked about on many occasions including one of our import articles in tonight’s issue).

I continue to have the SMU Price Momentum Indicator at Neutral – not so much because I feel prices will not rise in the coming weeks, but more because there doesn’t seem to be the strong support from the service centers that is needed to stair-step prices higher. We seem to be in a wait-and-see mode.

Stay tuned.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher