Final Thoughts
Final Thoughts
Written by John Packard
January 27, 2020
Tap, tap, tap… the sound of fingers drumming on a stack of blank purchase orders. Today I spoke with a group of key steel buyers and many of them are sitting and waiting. They are waiting because they have no tons to place, they are waiting because service center resale prices have not caught up to replacement cost, they are sitting and waiting because their inventories are fat, they are sitting and waiting because they are confused as to what is going on with this market.
Don’t get me wrong, there were spot orders placed this week at numbers very similar to those reported last week.
Don’t get me wrong, demand appears to be decent, not great, but not bad either. The head of commercial for a domestic steel mill told me their business was “…steady with good demand.” End users and service centers are not relating any horror stories. Demand seems to be fine for the moment.
There is confusion because some mills are late delivering their orders, while others are delivering early. The production lead times, especially on hot rolled, are not in sync with what the mills are reporting to their customers.
One large service center told me today, “It’s a bit tricky. The patterns suggest this is the end [peak] of the cycle.” When I asked this major buyer of hot rolled steel where they were seeing spot prices this week, I was told, “I’m not even looking.”
Tap, tap, tap….
I am not ready to announce the death of higher mill prices. At the same time, based on the discussions I have been having with steel buyers, there does not appear to be a clear-cut direction for momentum right now. I am considering moving to Neutral, but I don’t want to do that until I have evidence of a downturn in pricing. I still see decent demand. Whether that is translating into new orders on the steel mills, I am not sure. Therefore, I do not want SMU to be the reason for prices moving lower. Stay tuned.
I will be in Tampa next week for the Port of Tampa Steel Conference. They have a good lineup for a half-day program, and I recommend the conference for those who are in the Southeast, or who have a need to be in the Tampa area. I will be assisting the Port as the master of ceremonies and moderator of a couple of panels. For more information click on this link.
As you can see by an earlier article, we have contracted with Michael Smerconish to provide a keynote address at 11 a.m. on Wednesday, Aug. 26. We are building a strong program for each of the three days of the 2020 SMU Steel Summit Conference. After Smerconish we will have three segments focusing on attracting, training and maintaining young people in your organization. This is a critical topic for manufacturing, distribution and others involved with the steel industry. When you make plans, be advised that the conference will be going until 3:30 p.m. on Wednesday. You will still be able to make your 5 p.m. flight…. For more information about the conference and how to register, go to www.SteelMarketUpdate.com/Events/Steel-Summit
Registration is also open for the March 31-April 1 Steel 101: Introduction to Steel Making & Market Fundamentals Workshop. You can learn more and register online at www.SteelMarketUpdate.com/Events/Steel101
Today is the 28th of January. There are only a couple of days before the price increase on our newsletters will go into effect. You can get around the increase if you renew, upgrade or join prior to Feb. 1. Speak with Paige Mayhair at 724-720-1012 or by email: 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
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