'Twas the Night Before Christmas Year in Review

All nestled in their beds

No thoughts of turmoil running about in their heads

 

Little did they know

Little did they dread

2018 was staring at them

While dreams of sugar plums danced in their heads

 

The last three months saw prices move higher

2017 had ended with hot rolled on fire

The benchmark average was $640 per ton

Twenty dollars higher than when the year had begun

 

The New Year of 2018 started on an up note

Prices continued to rise

buyers thought it was a joke

Surely prices would fall, and soon, so they thought

 

By the end of January new numbers began with a seven

As February ended another hundred had been added

OMG is what many steel buyers said

OMG will these prices ever end?

 

Little did they know what was right around the bend

President Trump and his little friend

Wilbur Ross reported steel is a must

Trump put a tariff on it of twenty-five percent in a huff

 

Prices jumped, both foreign and domestic

New numbers began with an eight  

Did the mills know something the buyers did not?

At 70 percent capacity levels how could prices move so high?

 

Twenty five percent was the number he chose

Twenty five percent be it slabs, plates, sheet or coil

Twenty five percent with delivery deadlines no one could meet

And an exclusion request that was clunky at best

 

The market went crazy and prices continued to rise

By early March the numbers began with an eight

Closing in on the $890 which was the previous high seen seven years earlier

Steel buyers were amazed at how high the numbers had gone

 

May came and went

Exclusion requests were made

Energy spent

Few requests were granted, at least not then

 

Domestic mills filed exceptions

Thousands we were told

Foreign and domestic prices continued to rise

Buyers were concerned the market was growing old

 

By the middle of June a nine did appear

We were now on the path to challenge a record year

The highest prices seen during my 40+ year career

Was $1,070 just before the crash of 2008

 

Alas it was not to be

Prices peaked in late July at $915 per ton

Prices peaked as the summer was in full swing

From that point on the direction changed

 

Capacity utilization rates rose past 80 percent

The number selected so the mills could pay their rent

Steel buyers resisted paying prices so high

With costs to produce around $600 mills were willing to deal

 

Twas the night before Christmas 2018

Steel buyers are happy all nestled in their beds

Prices have fallen to $745 as the year comes to a close

Buyers are still pushing even as they lay in repose

 

This is something for another year

This is something steel buyers do not fear

The spread between foreign and domestic has changed

With the mills aggressive their books will remain clogged

 

Mills still dealing

Cost still low

We will have to wait

To see how low prices will go

 

Twas the night before Christmas

We are all nestled in our beds

Dreaming of good times

With family and friends

 

It won’t be long now

That we celebrate the New Year

It won’t be long now

That the game begins anew

 

Steel buyers trying to buy lower

Mills resisting their moves

The natural ebb and flow of business

Determining where prices will go

 

Or will the Trump administration come back with a new black swan event in the New Year?

We worry about 232, exclusions and such

Canada, Mexico will at some point gain entry

If the economy falters are the tariffs the president’s friend?

 

What of auto 232?

And China and the Section 301s?

2019 Promises to be another year of turmoil

Steel buyers need to sleep now, soon they will be burning the midnight oil.

 

Twas the night before Christmas

All nestled in our beds

With visions of sugar plums

Dancing in our heads

 

We wish a Merry Christmas

And a Happy New Year, too

We are looking forward to a good night’s sleep

Just like you

 

For 2019 is dancing about in our heads

What direction will prices go as the New Year begins?

We will think about that later, I think

For right now maybe it is best to just get up and have a drink…

 

Merry Christmas and a Happy New Year to all of our friends in the industry we love.

Steel Market Update