Final Thoughts
Final Thoughts
Written by John Packard
January 11, 2021
The runup in steel prices continues unabated with benchmark hot rolled prices now averaging $1,080 per ton. The $1,080 number on hot rolled is the highest in our history (we reported $1,070 back in July 2008). Steel buyers should note that even as we bust through our past record high, we believe prices will still move higher from here as there is nothing immediate that will affect pricing momentum, which is clearly on the side of the steel mills.
One thing that I find interesting as we canvass steel buyers is their belief that prices cannot go much higher than where they are today. In our most recent survey, we found 48 percent of the respondents reporting prices would peak at numbers below the $1,080 per ton we reported this evening. We are already collecting data that has HRC offers out there close to $1,200 per ton ($60.00/cwt). Yet, only 23 percent of the steel buyers believe spot prices will exceed $1,100 per ton….
In discussions I have had with steel service centers, there is an issue of credit lines affecting companies’ ability to buy enough steel to keep their businesses going. When you have an established credit line of X when the price of steel was $550-$600 per ton, and then prices effectively double, the credit line is cut in half.
I am hearing both service centers and steel mills are concerned about the potential for demand destruction due to the squeeze in credit lines.
Tomorrow (Wednesday, Jan. 13) Michael Cowden and I will discuss how we are seeing the steel markets as we conduct one of our free SMU Community Chat Webinars. We are in historic times, and I thought this might be a good time to 1) introduce Michael Cowden to our community, and 2) to review what our surveys are telling us, and what we are hearing in the marketplace as we discuss steel prices, demand, supply, commodity prices and a whole host of other subjects that impact your businesses. You can register for this free webinar by clicking here or going to www.SteelMarketUpdate.com/blog/smu-community-chat-webinars
With Michael Cowden joining SMU, the number of inquiries we have been receiving requesting subscription pricing has gone up dramatically. If you are interested in joining the SMU newsletter community as a new subscriber, please contact Paige Mayhair at Paige@SteelMarketUpdate.com or by phone at 724-720-1012.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO, John@SteelMarketUpdate.com
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
Sometimes new presidential administrations hit the ground running. No time for change like the present. And sometimes new administrations blast off on a SpaceX rocket bound for Mars. There’s a big universe, and we’ve got a lot of flags to plant. Such seems to be the case with the new Trump administration.
Final Thoughts
What’s been the impact of tariff threats on prices and demand? In short, not much – or at least that was the case when I was writing this column on Sunday afternoon. Spot activity for Canadian material, for example, has been put on hold over the last few weeks while the market waits to see what the new tariff landscape might look like.
Final Thoughts
Next Monday marks the start of the second Trump administration. The limbo we’ve been living in since Election Day in early November will finally come to an end. What better way to take a look at what’s coming up in Washington, D.C., than a conversation with Steel Manufacturers Association (SMA) President Philip K. Bell. He […]
Final Thoughts
It’s another week of big headlines and ho-hum pricing moves – which is to say the start of 2025 is looking a lot like the end of 2024. Scrap has settled up $20 per gross ton (gt). Steel prices, however, were a soft sideways this week. Chalk it up to uneven demand and abundant supply. And while we’re not aware of any major outages, some of you tell us that you’ve lost some shipping days here and there because of the recent cold snap.
Final Thoughts
I wrote in a Final Thoughts a few years ago that it seemed all the swans were black. More recently, I’ve been asked by some of you what the wildcards are for 2025. You could probably make the case that all the cards are wild now.