Final Thoughts
Final Thoughts
Written by John Packard
January 20, 2020
As we worked through pricing data this week, it was evident that much of the spot buying has occurred over the past couple of months. In our HARDI steel conference call this morning, those on the call who reported their inventory levels told the group they were either carrying inventories that were higher than normal or balanced. We did not hear anyone say their inventories were low and needed to be replenished.
At the same time, the HARDI members reported demand as being much better than January 2019, and in many cases better than what they anticipated going into the New Year.
We have this interesting situation developing where some steel buyers are holding back, believing steel prices will fall in the coming days or weeks. At the same time their own order books are quite good and expected to stay that way.
Late today I was speaking with the owner of a service center who told me he thought “the party was over” when it came to the steel mills collecting more price increases. “The last forty-dollar increase is not holding,” he said, adding he had heard of at least one flat rolled mill “having a hole” in their hot rolled order book. That was considered a negative.
At the same time, this distributor told me his business was quite strong. Spot sales were good, contracts were being released better than anticipated. After telling me how negative he was on the market, he said, “The one thing that could keep this thing going is a positive surprise on the demand side. That would be a good thing.”
Right now, I am not negative on the market as the conversations I have been having with steel buyers are indicating good demand. Granted, I have not yet spoken to those in the energy business, nor do I have a good feel at this moment about automotive demand, but until I get solid indications of poor demand in the market we will continue to have our Price Momentum Indicator point toward higher steel prices.
Having said all of that, you may notice that most of our indices were lower this week compared to last. This is not a positive. We will continue to work on why this has happened. Is this a correction from SMU being a tad high this past week or something more ominous? We will spend more time speaking with our data providers and report back to our readers. Stay tuned.
Congratulations to Nucor, ArcelorMittal and Steel Dynamics for being named to Fortune’s list of the World’s Most Admired Companies for 2020.
Speaking of steel mills, Steel Market Update will be conducting our next Steel 101: Introduction to Steel Making & Market Fundamentals Workshop in cooperation with the NLMK Portage, Ind., steel mill, which we will tour on Tuesday, March 31, 2020. Our workshop will be conducted over two days: March 31 and April 1 in Merrillville, Ind. Registration is open, and we anticipate this will be another sold out workshop. You can find more details on our website: www.SteelMarketUpdate.com/events/steel101
Speaking of registration, the SMU Steel Summit Conference is way ahead of last year’s pace, and we expect close to 1,200 executives will attend this year’s event, which will be held on Aug. 24-26 in Atlanta. I was speaking with one of the mill CEOs earlier today and I know he has blocked those dates on his calendar…. I promise another strong agenda and group of speakers. We will have some of the “tried and true” such as Dr. Alan Beaulieu of ITR Economics, and we will have some brand new like Ryan Avery (www.RyanAvery.com). Come join us in Atlanta. You can register by clicking here.
While we are trying to get you to spend money…we are offering an opportunity for companies that want to renew, upgrade or expand their existing subscriptions and not pay the price increase that will go into effect on Feb. 1, 2020, by contacting Paige Mayhair and pay for the renewal, upgrade or expansion by the end of this month. Paige can be reached 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
Tariff-related noise aside, there is one basic factor keeping buyers on the sidelines. Despite recent declines, HR prices remain at historically high levels. And there is no obvious support to keep them there.
Final Thoughts
United Airlines raised eyebrows earlier this month when it provided two forecasts for 2025 – one assuming a relatively stable economy and another assuming a recession. The reason? Uncertainty around the impact of President Trump’s policy shocks on the broader economy. And it sometimes feels like we’re seeing a battle between those two narratives (stable vs recession) play out within in the pages of this newsletter.
Final Thoughts
Despite some scary headlines lately (especially about Trump potentially firing Fed Chair Jerome Powell) this is not October 2008 (financial crisis) or March 2020 (onset of the pandemic). But it sure seems like we’ve taken a relatively strong economy and poured a thick sauce of uncertainty over it.
Final Thoughts
I put some of our survey data through ChatGpt, with interesting results.
Final Thoughts
Nearly 50% of respondents to our latest survey thought hot-rolled coil prices have already peaked. And where will those prices be two months from now? Responses were decidedly split on that question.