Final Thoughts
Final Thoughts
Written by John Packard
August 10, 2020
As I look at today’s hot rolled average of $440 per ton (-$10 from last week) I feel it’s my duty to provide some context to our number. SMU captured transactions placed late last week at, or slightly below, $400 per ton for spot hot rolled. Since Monday of this week we were capturing higher offers as the mills have filled their order books and extended lead times, in the process taking some of the pressure off the product.
The offers we are seeing for volume HRC this week are in the $420-$460 range. There are outliers at $480 per ton, and we decided to allow those in the mix this week.
Scrap is rumored to be heading higher in September. One steel buyer told me today he expects scrap up $20-$30 per gross ton. If correct, this will support higher prices. The question this buyer had was how much demand was taken out of the market with the low deals being cut this past week? Will lead times on hot rolled come crashing back in?
We continue to reference our Price Momentum Indicator as being Neutral, although my expectation is we have seen the bottom with the most recent transactions. If there is any uptick in demand, we may well see HRC reaching $500+ per ton during the month of September. Of course, there is an ongoing pandemic and who knows how strong actual demand will be 30 days from now?
We have a great speaker tomorrow for our free SMU Community Chat webinar. The Chief Economist for the American Iron and Steel Institute, Tim Gill will provide us his insights into the economy and the steel industry at 11 AM ET. You can register for this free webinar by clicking here or going to www.SteelMarketUpdate.com/blog/smu-community-chat-webinars
I spoke with Big River Steel CEO David Stickler yesterday. We had quite an interesting conversation about the expansion of the existing mill, we spoke about Brownsville and we spoke about electrical steels. He will have plenty to say during our one-on-one fireside chat at this year’s SMU Virtual Steel Summit Conference.
We shared our platform with Mr. Stickler, and he was quite impressed. You will most likely find him wandering about the event, as will many CEO’s from mills to manufacturing to distribution. When asked if he wanted us to block people from reaching out to meet him, he said absolutely not, his door is open, and he is open to the technology our virtual conference is bringing to the steel industry. You can join the Big River Steel CEO on our platform by registering here or going to www.smusteelsummit.com
We are now 12 days from the official start of the conference. In reality, we are about one week before the platform will be open to all attendees. We will open the platform early so those registered can begin the process of reaching out to make appointments with other attendees, review the latest schedule and confirm to your work calendars what speakers you want to see live, and who you want to see on an “on-demand” basis. You will also want to update your profiles and provide keywords to help people find you (for example, if you are a galvanized buyer, you would put galvanized in your profile), and you will want to search your keywords to find others with similar interests.
We are planning on introducing the “live” platform next Wednesday during our SMU Community Chat webinar at 11 AM on Aug. 19. You will then be able to see what and some of the who you will be missing if you are not registered for this year’s event. Of course, you can rectify that by clicking here.
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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