Final Thoughts

“Yes, I think this will be a dead cat bounce with prices declining again in the fourth quarter due to lack of demand and mills with available capacity.” Purchasing executive service center

“No dead cat bounce in my opinion.  We cannot be the cheapest market in the world with no import offers for long. Unless demand dips more, I see Q3 picking up a bit of steam.” Purchasing executive service center

“Yes, [dead cat] but I don’t know how much lower. At $500, mills start to flip out, both integrateds and minis. Scrap is going up or at least looks that way for August.” Service center purchasing executive

“I think when prices moved swiftly down to the $505 level from around the $540 level that it might have been “too deep” relative to many other factors, especially global prices. Therefore, as we adjust back up to a more normal replacement cycle, then a price bounce back to the mid-$500s seems very reasonable. While mills are targeting to get the price back to $600/ton, I think that will be a tall challenge. As the market resettles, we’ll still have the same dynamics in place as we did prior. There doesn’t appear to be enough reductions in domestic capacity or imports to lower the supply enough to create any tightness. Many are concerned that Canada and Mexico will become more aggressive in a rising U.S. price environment, to grab more market share. Scrap prices, which typically rise in the fall, may help to keep a floor under prices, but uncertainty in demand may be the biggest wildcard for the second half and could tilt the market in either direction. In summary, I think we’ll stay in a $540-$580/ton range on average for the July-Dec. period, but probably more risk to the downside than the upside.” General manager service center

“I do not feel the momentum will continue.  After a bump in pricing, I expect a pause in activity, and then perhaps a slow drift lower. We may not test the lows seen in June, but I do not think this current rally will last.” Service center executive

“We think pricing will relax by October. I think we see $560-580 in Q4.” Purchasing executive service center

“Only concern right now is sustainability of current demand. Things are solid today…but it just seems like a bubble is due to burst.” Sales manager service center

Time will of course tell. Keep your eyes on scrap (now being projected to rise modestly in August), lead times (we are seeing some mills moving out) and watch to see if service centers can pass along the higher prices to their customers. “I am starting to see some success when quoting new numbers,” is what we heard from the president of one service center this afternoon. “The momentum is with the mills.”

Reminder: SMU NexGen Leadership Award nominations deadline is Thursday, Aug. 1, 2019. Please look at the young people in your company and nominate those deserving. It will speak well of your company as well as the people who are being nominated. You can find more details at www.SMUAward.com

Wow, 40 days to go! The progress on the 2019 SMU Steel Summit Conference is rocketing along. I think anyone who has attended a past conference is going to be surprised at the upgrades we (CRU and SMU) are making to this year’s event. Our sponsors and exhibitors will be receiving more bang for their patronage. As an attendee, there will be more room to roam and meet. The lunch area is closer than last year to the main conference room, and we will have multiple locations with the agenda so if you are in the exhibition area or meeting outside of the exhibition area you can keep track as to who is on stage and who is coming. There will be more room to mingle and hold one-on-one meetings without having to leave the convention area.

Of course, you will also have our SMU Events App, which you can download now from your App store (or login from one of our past conferences). The 2019 conference attendees are loaded into the App already but will not be released until the end of this week. You will receive an email advising you that the App is available (registered attendees only will be able to access the App).

We are closing in on 900 registered attendees (we had 912 last year). We added the following companies over the last couple of days: Doosan Bobcat, Nippon Steel Trading Americas, Atkore International, ANDRITZ Herr-Voss Stamco, Nucor Tubular, Sormak Mine Company (Australia), Universal Steel Products,  Georgia Ports Authority, SSAB Americas, Ashrafco (Egypt) and L&W Supply. Need I say more? To learn more and register: https://events.crugroup.com/smusteelsummit/home

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

John Packard, President & CEO