Final Thoughts

I spoke with a buyer in the South who was able to put the finishing touches on his contracts. “They [domestic steel mills] all wanted to try something different. They were trying to put in a floor with no ceiling.” He told me the floor with no ceiling was good for the mills, but not his business. He said the mills did work on decent discounts and played with a lot of the adders (extras, freight). “They [mills] all worked on narrowing the window [the number of tons before discounts are allowed].”

As an aside, I was told all of the southern steel mills were running an average of two weeks behind on orders. Sources said AM/NS Calvert was short slabs and had no spot tons for December. Many of the mills are waiting to open January’s order book. I was also told service center spot hot rolled was selling for $760-$780 per ton.

Steel buyers are looking at both domestic and foreign sources. A trading company executive told me earlier today they are getting more serious looks, and with higher domestic prices, certain “commodity” type products (such as 0.019 galvanized) are becoming more competitive against domestic numbers. Prior to the run-up in domestic prices, most traders were concentrating on value-added products such as Galvalume, ultra-light guage galvanized and prepainted steels.

At the same time, this trader told me there were only so many legitimate foreign sources that you want to trade with in a high-priced environment. “Do you want to get involved with some of these oddball mills?” he asked. Another way of saying there may be more foreign coming, but don’t expect foreign to flood our shores….

One service center executive told me his company is in the final throws of their contract negotiations. I was told the discounts (off of CRU) were about the same, but other areas are “less generous.” He reiterated what I heard from others regarding the mills being less flexible on the +/- on tonnages. I was also told negotiations were a “mixed bag” when it came to individual mills. Some were more willing to negotiate than others. Part of the relationship game (come to one of our Steel 101 workshops and we can discuss relationships in more detail).

On another topic: SMU is working in partnership with Port Tampa Bay on the Tampa Steel Conference. This will be the 32nd year for the conference. I am excited to be involved. The 2021 event will be on a virtual platform similar to the SMU Steel Summit Conference produced earlier this year. The Tampa Steel Conference will be held on Tuesday, Feb. 2. We will have a program that will take up most of the day. The agenda will include a speed networking session along with quality speakers. Our speakers will be announced very soon. The price of the conference will be super competitive as we will be charging $150 per person for those who do not qualify for a discount. For those who have attended the Tampa Steel Conference in the past, you will get a 50 percent discount (all in at $75 per person) for registrations made by Dec. 31, 2020. SMU and CRU member companies will get a $25 discount and there is an additional $25 if you register more than one person (total would be $100 per person). We will have a strong program with economist, traders, analysts, logistics experts and others involved in the industry. I will be the moderator. We anticipate registration to begin later this week.

Also, we are working on three steel hedging workshops. We should have more information to announce by late next week.

As always, your business is truly appreciated by all of us here at Steel Market Udpate.

John Packard, President & CEO