Final Thoughts
Final Thoughts
Written by John Packard
April 15, 2019
I am making the following comments in my Final Thoughts section for a reason. My Final Thoughts is the area where I will sometimes provide my opinion or make comments regarding conversations that I am having about the market that I haven’t been able to totally put my finger on yet. I know that may sound a little confused, and that is what I am hearing from a number of buyers in the flat rolled market (confusion). Let me try to make the muddy waters a little less murky, but I doubt if the waters will be clear anytime soon.
I spoke with a couple of service centers this afternoon who were reporting their company was losing an excessive number of orders. This led both executives to surmise that the $40.00/cwt base number they have on coated was no longer a competitive number. The president of one of the distributors told SMU they had run the numbers and the base price had to be around $37.50/cwt. I can’t tell you if that is an accurate number or not at this point. However, I did pick up a couple of “outliers” on galvanized and Galvalume in this week’s questionnaire that concern me…
Later in the afternoon I spoke to another service center who has not seen base price numbers below $40.00/cwt on coated. However, he reported there were “foreign fighter” prices out there where extras are waived or reduced in order to compete against foreign steel, especially on light gauge.
There were a couple of mills referenced as being the most competitively priced on coated products (not integrated mills). However, there were questions being asked wondering if one or more of the integrated mills may have jumped into the market since lead times are getting into the area where automotive tends to slow down for summer shutdowns. I can’t confirm that is the case (if you have information please let me know). I will continue to work on getting answers to that question.
Hot rolled is a little easier to calculate since there are not as many extras to play with. Steel buyers were telling me that JSW continues to be aggressive as they attempt to move their tonnage above 30,000 tons per month of melt. We picked up a few price points in our survey that had HRC as low as $600 per ton, and one buyer suggested for tonnage the number may actually be $580 per ton. My price range does not reference those numbers as the low point due to the limited widths and the number of tons. Even so, the market should be aware that sink-in-water HRC can be had at numbers below our low point. How soon before the other mills respond? One large HRC buyer told me the other mills will have no choice but to respond.
There seems to be a negative sentiment growing within the service center community. I am going to spend more time this week talking to distributors to get a better sense as to what is driving sentiment and if the negative feelings are just in one region of the country.
I just returned from Orlando, Fla., where I spoke to the Air Distribution Institute. Their businesses appear to be doing very well right now, but like the service centers their questions centered on what is going to cause the steel prices to move lower. On the surface, based on the actual lead times being quoted by the mills this week, you would think coated steel prices would be quite strong…
We have openings in our Steel 101 workshop in Davenport, Iowa, on May 14 & 15. Please go to www.SteelMarketUpdate.com/Events/Steel101 for more details and a link to registration.
We continue to register more executives for the 2019 SMU Steel Summit Conference, which will be held in Atlanta on Aug. 26-28. You can download a brochure by clicking here or you can go to our website at www.SteelMarketUpdate.com/Events/Steel-Summit to get more details and a registration link. If you have any questions, please contact Brett@SteelMarketUpdate.com
Finally, if you would like to learn more about either becoming a subscriber to SMU or upgrading your membership, please contact Paige Mayhair at 724-720-1012 or by email at Paige@SteelMarketUpdate.com
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
The US steel market has whipsawed upward on the prospect of expanded Section 232 tariffs of 25% being applied to imported steel - including downstream goods - on March 12. It seems pretty clear that domestic steel mills have the ear of the Trump administration when it comes to Section 232. The result? The much-anticipated Trump bump has finally arrived - and then some.
Final Thoughts
Some of you have told me that the current market feels about as crazy as early 2021 when demand snapped back after the initial outbreak of the Covid-19 pandemic. Others have said it might be more like late February/early March 2022, when Russia launched a full-scale invasion of Ukraine – and, in the process, caused […]
Final Thoughts
To say we’ve entered a “Brave New World” since Jan. 20 might be an exaggeration, but we’ve definitely entered a different one.
Final Thoughts
I think it’s fair to say that the last few weeks – and last week especially – have been among the most intense for any of us covering steel (or aluminum).
Final Thoughts
A look at how SMU survey respondents are reacting to President Trump's recent actions on tariffs.