Final Thoughts

One of the HARDI wholesalers told the group, “We are holding back from buying. I think we will see things start to come back down again.”

Another wholesaler said rising steel prices may be pulling demand forward, setting the stage for a buyers’ strike in the months ahead. “We have taken our [conservative] position and are sitting back to see what happens,” he said.

The corporate head of purchasing for a large service center had a similar take on the market and market pricing in a conversation SMU had with him this afternoon. “I am still not a believer it’s going to be long-lasting [higher prices on flat rolled],” he said. “There is no more demand than there was prior to the first increase. People have bought more, but they are not using more… Pent-up demand carried the day for the second increase.” He then went on to tell us that the planned outages at the domestic steel mills will keep the markets somewhat tight for the next 30-45 days. “Wait until lead times hit November. The domestic mills will be begging for orders come November and December.”

Not everyone is buying the notion that prices can’t go higher from here. The president of a service center told us, “I’m confused. I’ll tell you that. If you are a believer [in steel prices going higher] you put an extra week into inventory. If you don’t, you only buy what you need, then you have to keep going back [and buy over and over again].” He then went on to tell SMU that believing this is not going to last is a bullish sign. He also told us, “If U.S. Steel cuts back, then this might have legs. If they produce like drunken sailors….”

Right now, the SMU Price Momentum Indicator is pointing toward higher prices over the next 30 days. Once we get through the maintenance downtime over the next 30-45 days, we will better understand if the market will have “legs” or will slump. Remember the dead cat bounce earlier this year? It took a couple of months to see the cat had no legs, and the market headed lower.

We are conducting our early August flat rolled and plate steel market trends survey. We will have articles on what we gathered beginning in Thursday’s issue of our executive newsletter. Data providers and Premium level members will get access to the PowerPoint presentation on Friday afternoon.

A reminder of a couple of things to watch for at this year’s conference: SMU/CRU will be rolling out our Service Center Inventories Indices on flat rolled and plate. This will happen during the opening of the conference at 1 p.m. ET on Monday, Aug. 26, in the convention center. We will begin sharing the results with our Premium level members beginning in September 2019. Another reason to upgrade your membership from Executive to Premium. For details, contact Paige Mayhair at 724-720-1012 or by email: Paige@SteelMarketUpdate.com

Also, for those of you who are renewing, be aware we have reduced the number of options we offer, notably we have eliminated the one-person membership (it now goes to four people) as we look to increase our coverage within your company. We have also added Regional and Global memberships, which allow you to place unlimited numbers of executives on your plan. Paige is the one to contact to get more details.

I am quite busy as the conference heads at us at breakneck speed. The conference will be exceptional this year. Excellent speakers, content, location, food and the best networking of any steel conference in North America. To register or to learn more click here.

The upcoming Steel 101 workshop in Cincinnati is close to being sold out. I highly recommend that if you have interest in attending this workshop, click here or ask Events@SteelMarketUpdate.com for more information..

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

John Packard, President & CEO