Final Thoughts

Following are some of their comments:

“Market demand is really mixed. Our business was lighter in January and it could be affected by China supply issues. Construction business seems very good, energy and cars not as much. Demand should be seasonally good in March and April. That could be good enough to keep prices afloat. The price increase will bend psychology higher…and may put a floor under prices for now.”

“The market is not quite ready for the AM numbers, but we could get there, particularly on HRC, as the production volume coming offline in Q2 is significant.”

“I think $620 HR is too high considering the range has been $560 to $580/ton.” 

“It’s much better for the market for the mills to publish a list price rather than simply an increase amount. Their challenge is that they can’t publish a price that is lower than what some customers are paying. Therefore, AM wasn’t selling anything higher than $620. So, the mills are making another run at the $600 resistance point in pricing.”

“I found Arcelor’s pricing to be a message to other mills on where they believe pricing should be. I think the market might see $600 HR, but not more than that. Assuming scrap is down in April, we will see another interesting dynamic. By then, most lead times should be May/June, when demand falls off during the summer months. So maybe their thinking is, let’s get as much as we can, while we can.”

“Scrap is strong, mill lead times are extending, service center inventories are low and some capacity is coming offline shortly. I think the mills are trying to say that even with the stock market meltdown, steel is not weakening. Personally, I am worried about the impact of both the coronavirus and the correlation with oil.”

“I think AM’s base of $620 HR and $820 on CR and coated is simply a case of aiming at a number in the hopes of settling anywhere above the current level. Certainly, a $600 floor remains a good goal for the mills, generally speaking.”

“The real wildcard looks to be the impact of the continued spread of coronavirus. It’s no longer just a China problem. When meetings and events, possibly even the summer Olympics, may be cancelled out of fear of the spread, the downstream economic hit becomes deep and possibly long term.”

“Most are citing the expected increase in scrap prices for March as the reason mills announced an increase now, but short of an expectation that scrap prices would be lower, I think the mills’ timing is not that important. Given the recent slide in spot prices, their attempt to reverse the direction, or at least to stabilize the price, makes sense on its own. Given the growing global crisis associated with the virus, it all may be moot pretty soon anyway, so there’s no risk in their going for it.”

Steel Market Update Events

Hopefully by August the coronavirus will have run its course and business will be back to normal. But the market may still be dealing with the after effects. Join us in Atlanta on Aug. 24-26 for Steel Market Update’s 2020 Steel Summit to hear what the experts have to say about the market post COVID-19 and the lessons learned from this tragic epidemic. Register by clicking here or by going to the website address www.SteelMarketUpdate.com/Events/Steel-Summit.

There are still a few slots left for the SMU Steel 101: Introduction to Steel Making & Market Fundamentals Workshop March 31-April 1 in Merrillville, Ind. The workshop includes a tour of the NLMK Portage steel mill. Register for the conference by clicking here or by going to www.SteelMarketUpdate.com/Events/Steel101

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Tim Triplett, Executive Editor