Final Thoughts

Christmas and Hanukkah have created a market of silence as most steel buyers and steel mill sellers are concentrating on other things than negotiating the next big deal. Due to the limited number of available data points, we chose not to move our prices on hot rolled, cold rolled, galvanized, Galvalume or plate steels this past week. Our hot rolled base average is $570 per ton ($28.50/cwt), cold rolled base average is $760 per ton ($38.00/cwt), galvanized base average is $760 per ton ($38.00/cwt), Galvalume base average is $770 per ton ($38.50/cwt) and the discrete plate average is $690 per ton delivered ($34.50/cwt).

We will evaluate the market on Monday to determine if prices need to be adjusted as we move into the New Year. If we do make price adjustments, we will adjust our website and put out an article that will be available to our members to read online. (We will reproduce the article in Thursday’s issue as we are not publishing on New Year’s Eve).

Winter is always a tenuous time of the year as cold can play havoc with steelmaking equipment. There was an explosion on Friday at ArcelorMittal Indiana Harbor at their #4 furnace. Local news outlets reported no injuries, and the local union representatives were saying the damage was being assessed. An ArcelorMittal spokesperson told SMU the IH-4 steelmaking operation is down and repairs are being evaluated. There is one other operational furnace at Indiana Harbor, which is IH-7.

We need to carefully watch the integrated mills that have shut down (or lost) a number of blast furnaces throughout 2019. AK Steel shuttered Ashland. U.S. Steel has taken furnaces off-line at multiple facilities and ArcelorMittal previously announced the IH-3 furnace was at the end of its life. Now, they have temporarily lost another furnace producing approximately 4,900 tons of pig iron per day (1.788 million tons per year). These closures should have an impact on supply as we move into calendar year 2020.

Other big news made during calendar year 2019 has to do with the radical transition occurring within the steel mills. Cleveland-Cliffs announced they were buying AK Steel (deal should be completed in early 2020), U.S. Steel bought a 49.9 percent interest in Big River Steel with an option to buy the remainder within four years. Big River Steel is doubling their capacity. Nucor announced a new plate mill and Steel Dynamics announced they were building a new mill in Texas.

Timna Tanners created a stir when she looked at all the new capacity and trademarked the term Steelmageddon. She (and other analysts) expect market prices to crash in 2021-2022 when the new capacity hits the market. My opinion has been more supportive of the industry’s ability to recognize what needs to be done, and we are seeing the “rightsizing” of the industry through the closure of the hot ends at a number of mills (AK Steel Ashland, USS Great Lakes) as well as the taking off-line of a multitude of furnaces.

Our 2019 SMU Steel Summit Conference broke our own record for attendance with 1,078 executives coming to Atlanta to network with manufacturing companies, service centers, steel mills, toll processors, trading companies and suppliers to those industries. We are now the largest flat rolled/plate steel conference in North America and our CRU owners are telling us we may be the largest steel conference of its kind outside of China. We anticipate the 2020 event will be the place to be, and to be seen. The dates for the 2020 SMU Steel Summit Conference are Aug. 24-26 at the Georgia International Convention Center.

We are moving into a new decade. One that Alan Beaulieu of ITR Economics has been calling the “Roaring 20’s.” These “Roaring 20’s” will be a mirror image of the 1920’s and will end in a similar fashion – with a crash. You will have an opportunity to listen to Dr. Beaulieu at the 2020 SMU Steel Summit Conference, and to hear more about his forecasts for construction, manufacturing and other steel-using segments of the economy in 2021 and 2022.

Registration is open for the 2020 SMU Steel Summit Conference. Our prices have not changed from the 2019 conference, even though we are investing more into the 2020 conference.

We are in negotiations with a TV personality who will be covering the Republican National Convention while our conference is ongoing. We hope to convince him to sneak from Charlotte to Atlanta on the last day of our conference to give us his insights into what the political tea leaves are saying, and what this election means for the U.S. economy, our allies and the world in general. You will want to stay until the end of the conference as we are looking at putting together an exceptionally strong program from beginning to end.

You should begin to think about young people within your organization who are showing strong leadership and/or creative skills. We will once again be looking for a strong group of candidates for the 2020 SMU Youth Leadership Award. We will have more details about the award as we move further into the New Year.

Our SMU Service Center Inventories and Shipment Data is being well-received by the marketplace. Trust in the data is important and we recognize this. We have intentionally put together a well-balanced group of flat rolled and plate steel service centers in the United States, which we feel fairly represent the industry. Our Premium level subscribers have access to a portion of the data we are collecting. Our data providers have access to all the data.

If you would like to learn more as to what Premium subscribers receive, please contact Paige Mayhair at 724-720-1012 or by email: Paige@SteelMarketUpdate.com

If you would like to become a data provider, please contact Estelle Tran at 724-759-7876 or Estelle.Tran@crugroup.com

You are also welcomed to contact me with any questions you might have, whether as a possible data provider or if you would like to know more about our Premium memberships and the benefits received above and beyond our normal Executive level newsletter and website usage.

I want to wish everyone a Happy, Healthy and Prosperous New Year. We are united in the desire for the world to be at peace, for business to be healthy and fair, and that our political situation sorts itself out on as fair and equitable a process as possible.

Steel Market Update will not publish on Tuesday evening (New Year’s Eve), but we will be back on our normal publication schedule beginning on Thursday of this week.

As 2019 comes to an end, I want to personally say that it has been a privilege to communicate with you about the steel industry, and with many of you about your experiences within the industry. Many of you have become close personal friends, and you have brought joy into my life. For this I am eternally grateful.

I will continue to strive to produce new products of value for the steel and manufacturing industries during 2020. There are projects in the works, which means I will continue to be involved in what will be my 43rd year in the industry.

Thank you for allowing me to share my thoughts, experiences and dreams with you on a regular basis.

I hope, as 2020 progresses, I will be able to speak to you directly at our conference, workshops, CRU events or during one of my speaking engagements.

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

John Packard, President & CEO