Final Thoughts
Final Thoughts
Written by John Packard
January 28, 2019
What an interesting week it has been, and it’s only Tuesday. As previous articles have already stated, Nucor, U.S. Steel, NLMK USA and ArcelorMittal (verbally) have joined California Steel and USS/POSCO by announcing $40 per ton price increases on flat rolled. For those of you who are new to the industry or to our newsletter, the appropriate question at this point is: $40 per ton added to what base price? No mill has announced specific “minimum” base price levels, so we are left to guess, and steel buyers are left to negotiate with their suppliers.
My early channel checks show buyers are split on whether the price increase “sticks” (is collected in full), but many are of the opinion that the bottom in spot prices should be achieved and we will either see a balanced pricing market or we will see a portion of the increases being collected.
Again, I remind everyone that the plate steel market has been marching to its own drum for some time now and is not running in sync with flat rolled.
It is Steel Market Update policy to take our Price Momentum Indicator to Neutral any time there is a credible price increase announcement by the domestic steel mills. We do this because we do not want to be responsible for moving the market in one direction or the other. It is still very early in the process and we will need to analyze how the increases are being marketed to steel buyers, how much “energy” is being used by the mill salesforce and what is happening to lead times. We will continue to analyze and report on the market later this week, and we will move our indicator once we have a clear sign prices will be moving in one specific direction.
I am in Starkville, Miss., conducting one of our Steel 101 workshops. We have a full house and Steel Dynamics in Columbus did a great job with the mill tour this afternoon. Our thanks to Don Switzer and the SDI team for their time, effort and support of our workshop.
I will be back in the office on Thursday, and since it is in the low 30’s today, I am looking forward to getting back to south Florida. Enjoy the weather wherever you might be; spring is right around the corner. I know this because yesterday I walked the campus of Mississippi State and the daffodils are in full bloom.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
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