Final Thoughts
Final Thoughts
Written by John Packard
December 21, 2020
I received a call earlier today from one of our readers who is also a consultant to companies who purchase flat rolled steel. He mentioned to me that there is some confusion with companies who think our index is the same as CRU, since we are owned by CRU. That belief is ill-advised and flat out incorrect. The SMU index is separate from CRU, and we have a completely different methodology. Due to the difference in methodology, there can sometimes be large variances between our index and that of CRU. Last week it was close to $50 per ton ($2.50/cwt). My recommendation for those of you who are trading futures or have contracts tied to the CRU index that you purchase both their product (which gets you access to their index) and ours.
Spot steel prices continue to climb, and we now anticipate they could challenge all-time highs on the SMU index, which reached $1,070 per ton ($53.50/cwt) in 2008. We learned this morning of one minimill quoting spot hot rolled at $51.50/cwt ($1,030 per ton). With scrap anticipated to move higher by possibly as much as $80 per gross ton, steel buyers should be prepared for more increases ahead.
One of our scrap and pig iron sources advised us that the ferrous scrap export markets continue to be quite strong, and foreign mills are having difficulties sourcing material. Our source believes HMS (heavy melt scrap) is poised to exceed $500 per metric ton CFR in the near future (most recent sales to Turkey were referenced as being $465-$470).
The SMU Price Momentum Indicator continues to point toward higher flat rolled and plate steel prices over the next 30 days.
This is the last issue of Steel Market Update this week due to the Christmas Holiday. We will publish our last issue of 2020 in one week (Tuesday, Dec. 29).
This year has been a trying year for many families. Most of the steel and manufacturing industries weathered the pandemic better than service industries. I want to take a moment to reflect on those who lost jobs, and those who have lost family and friends to the virus. We truly hope there is indeed a light at the end of the tunnel, but we know dark days stand between us and that light. I beseech you, your family and all who consider themselves part of the SMU steel community to be thoughtful during the Christmas and New Year holidays.
From everyone here at Steel Market Update, we want to wish every one of you and your families Happy Holidays.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
The SMU Team:
Tim Triplett
Brett Linton
Sandy Williams
David Schollaert
Peter Wright
Jill Waldman
Paige Mayhair
The SMU Steel 101 Instructors:
Mario Briccetti
Roger Walburn
Charles McDaniels
Sandy Simon
The SMU Steel Hedging Workshops Instructor:
Spencer Johnson
As well as all our partners at CRU around the world
John Packard
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