SMU Market Trends: Mixed Views on Sustainability of Prices

“The mills are surely in the driver’s seat right now with supply so low and lead times very extended. Yes, I am drinking the Kool-Aid. Q1 will be very tight with AM not bringing on anymore blast furnaces.”

“There’s plenty of supply available, the mills are just practicing discipline…I think.”

“I’m reasonably confident the mills will be able to collect their price increases at this point. November should see an influx of capacity coming online [easing the supply tightness]. It may take into the first of the year to balance out.”

“The mills will collect most of the $50/ton announced for HRC but less than half for plate. The shortage of supply is a temporary situation. Mill maintenance outages should be completed by November and Phase 2 of Big River Steel should add more tons to the market. We have seen the impact the first wave of the pandemic has had on the general economy. While the flat rolled steel prices are strong today, there are still concerns about a pandemic second wave and lockdown orders, no agreement for the latest coronavirus relief bill, the presidential election result and question of a peaceful transfer of power, plus the ongoing protests and clashing counter protests.”

“In time they might collect. The test will be watching lead times. Most mills are shipping late now, so between maintenance outages, holidays and controlling order intake, I think the mills maintain price momentum through Q4. I don’t see a severe shortage. There’s panic buying right now due to extended lead times and shipments per day are up, so a combination of low inventory and extended lead times may give the perception of an overheated market. Also, last quarter saw a lot of pent-up demand being fulfilled and that shouldn’t persist into Q1 2021.”

“I do believe there is a shortage, but the extremely low price from last month brought buyers off the sidelines to restock. I think two months from now will determine if pricing is going to last. I have doubts the recovery will be as strong once we get into the typically lower winter season.”

“Yes, we think the mills will collect. Availability is an issue with many maintenance outages, limited imports and further slab-import restrictions. We think the market will remain very tight through Thanksgiving. Beyond then, we are not sure. We do see better demand than we had feared, and of course supply constraints will be a factor in the market at least into December.”   

“I don’t think the U.S. steel market is on track for a severe shortage of supply. If the mills thought so, capacity utilization would be much higher than it is now. Imports will be back in the first quarter of 2021. Covid has messed up so many supply chains that some are double and triple ordering steel to ensure sufficient supply. When the supply chains get fixed, these extra orders will result in decreased demand. Look for auto demand to also decrease.”