SMU Market Trends: Consensus View Sees Even Higher Prices

Here’s what some respondents had to say:

“Flat rolled prices absolutely have more room to rise. I see demand in 2021 as much higher.”

“With availability still limited, flat rolled will move higher. Those who need tons will have to pay up.”

“Steel prices have to move higher; there’s no supply. When the January order books open up,  it’s going to be much higher than $700 a ton.”

“Flat rolled and plate steel prices still have room to move higher. HR should top out around $800 a ton. Do I expect a shortage in the next few months? Are we not in the midst of a shortage already?”

“Demand for the next few months will remain very strong as people try to refill the empty pipelines. Demand will be moderately lower in 2021.”

“Do steel prices have room to move higher? This is actually a pretty simple situation, whereby supply is not growing at the same rate as demand and it has created an imbalance. Yes, weekly production is growing, but most of the growth is in non-flat-rolled products, because flat-rolled has effectively been at a full rate, based on the assets that are running. Plus, we have finished imports at new lows, some planned 4Q outages, a strike at NLMK, etc. So, until supply increases and meets the demand rate, prices will move higher. People too frequently try to tie pricing to demand, but supply is the more obvious driver.”

“Limiting supply was key to the price runup. Most flat rolled mills are probably running at 85% capacity already. If you’re an integrated mill, do you limit your output and keep prices high or add more capacity to sell more volume but at a slightly lower price? I think most mills will wait and see how we do with winter COVID outbreaks before bringing back more furnaces.”

Not all the comments were quite as bullish:

“Steel demand has impressed to the upside. It will be slightly better in 2021 than in 2020. However, we don’t anticipate a full recovery and markedly improved demand until late 2021 or 2022.”   

“If the current level of demand were sustainable you would see the integrated mills bringing back idled furnaces, but they have not. Auto demand will begin to decrease once the dealers’ lots receive 2021 models.”

“I think there will be considerable resistance at $700. Some mills may fetch more, but I think we stall near that number.”