Final Thoughts

Here are some comments of note that were provided earlier this week:

“Dead cat bounce? If the mills attempt a third increase (which I fully expect), it will dismiss the chance of prices sticking at higher levels for more than 60 days. If the mills announce a third increase in the next 2-3 weeks, they may accomplish filling order books for January, but dramatically increase the odds for the dead cat bounce to occur, as very few will need or want steel in February and beyond at elevated pricing. One mill told us they will run up pricing as high and as quickly as they can, but admit they see no longevity to the higher pricing. Unfortunately, this behavior promotes mini-cycles, which we are doomed to repeat over and over. Knowing these cycles have become the norm over the last year, it mystifies me as to why USS would WANT to go away from contracts in 2020 and live largely in a domain of mini-cycles. We believe the Arcelor BOF idle at Indiana Harbor will help pricing longer term, but doubt we will see the impact before Q2. We also fully anticipate USS putting Great Lakes on idle in the coming months. If scrap continues to claw its way upward, capacity is taken out of the market, imports are kept and bay, and demand remains flat, we see support for higher pricing. We have become more of a psychology-driven market than a data/metric-driven market this year and that just makes long-term decision making much more difficult. In our opinion, we don’t see index pricing exceeding $550 in Q1 2020. Conversely, we don’t see it falling below $475 in that timeframe. If you throw in all the variables of an election year, an artificially stimulated economy, global trade and geopolitical happenings, the dawn of more EAF capacity in North America, an unprecedented economic growth cycle, possible presidential impeachment, record U.S. debt…well it makes figuring out our industry as easy as wading waist deep in alligators.” (Large service center)

“Mills are firm in their pricing. Not just another dead cat bounce.” (Service center)

“I’m thinking that prices head higher for a few weeks, like July, but likely fail to find supporting demand. That then creates a change in price direction. I think 2020 might be like that; wash, rinse, repeat.” (Large service center)

“Prices are pretty firm. I think these two will stick; probably be another increase soon. Removal of the blast furnaces should keep prices up, if the mills have some discipline…but we know that never happens.” (End user)

We released our final report on service center inventories, shipments, percentage of inventories committed to contracts, days of supply on order and total days of supply on hand to our data providers this afternoon. Included in that report was an analysis of the data and forecast for flat rolled and plate steels. This report is only available to service centers who supply SMU data (on a confidential basis). The report is free to data providers.

If you would like to become a confidential data provider, and your company is a service center or wholesaler buying, selling and inventorying prime flat rolled or plate steels, please reach out to Estelle.Tran@crugroup.com or John@SteelMarketUpdate.com and we will provide more details.

Tomorrow we will release a scaled down version of the data to our Premium newsletter subscribers. If you would like to upgrade an Executive level subscription to Premium, please contact Paige Mayhair at 724-720-1012.

Paige can also assist those companies looking to renew, expand those who receive our newsletter(s) as well as those receiving the newsletters who might have questions. She can be reached at Paige@SteelMarketUpdate.com or by the phone number listed in the paragraph above.

We are still taking registrations for the Jan. 7-8, 2020 Steel 101 workshop in California – go to www.SteelMarketUpdate.com/Events/Steel101 for more details.

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

John Packard, President & CEO