Final Thoughts
Final Thoughts
Written by Tim Triplett
January 29, 2021
Steel Market Update’s check of the market this week puts the benchmark price for hot rolled at $1,180 per net ton. The spot market continues to set new highs for the HR price, which in the second week of January topped the old record of $1,070 per ton reported by SMU in 2008. It has set new records five times since then and continues to fuel speculation on how much higher it can go.
SMU continues to poll the market on the subject, and the current consensus among steel buyers is that the market is likely to peak around $1,200 per ton—that would be just $20 more—and that the peak will likely come in February or March. There’s no way to know that for sure, of course, and just because the price quits rising does not necessarily mean it’s doomed for a big fall.
Here’s what some of the service center and manufacturing execs responding to SMU’s questionnaire had to say:
“For the next 45 days HRC mills can charge whatever they want.”
“I’m not sure it can go much higher, but I thought the same at $1,000 and $1,100.”
“It depends on availability in the second quarter. We just do not expect the market to really open up; as furnaces come back online, others will go down. Buyers hate pricing at $1,200, so believe we are close to a peak, but we’re not expecting to fall off a cliff.”
“We believe HRC is peaking now. Demand for HRC is not nearly as robust as cold rolled and coated. Not weak, but no longer in a frenzy.”
“I believe the mills will try to get one more increase unless the chip shortage in the auto industry prevents it. But $1,200 is too high. There will be a correction, the question is when and how much.”
“Domestic mills are still pushing the limits with their ‘take it or leave it’ attitude. Total greed at this point.”
“I see it happening in late April or early May, there are too many other factors not being considered right now that could give this market staying power.”
“Other than flashy headlines, hitting a peak doesn’t mean it will immediately drop.”
“I wish articles would stop talking about all these stupid cracks in pricing that just aren’t there. It messes up the market.”
February Scrap Prices
Finished steel prices are influenced by the ups and down in scrap prices. SMU reported on Sunday that prime scrap prices were likely to settle sideways in February, while obsolete grades were looking to trade lower by $50-60/GT, following two months of significant increases. Trading was still ongoing at that point. One of SMU’s scrap sources offers the following update: “It’s apparent today that some mills did not buy as much as they would have liked to last week and have returned “quietly” to the market this week to try to secure more scrap, at higher prices than they would have paid last week. There have been some weather disruptions across the country that are contributing to the slowdown in scrap flows. Also, export is at or near a low, certainly out of the U.S. So, we have hit a bottom and will likely see some higher prices come early March, though maybe not as high as in early January when export pricing was $90 higher than it is today,” he said.
Special Events
SMU has several conferences and workshops in the works, and it’s easy to get more information. Our first Steel Hedging 201: Advanced Strategies & Execution will be held on Feb. 23-24. Our next Steel Hedging 101: Introduction to Managing Price Risk Workshop will be held on March 30-31. Our live and in-person SMU Steel Summit Conference will be held Aug. 23-25 at the Georgia International Convention Center in Atlanta. You can learn more by clicking the event.
As always, your business is truly appreciated by all of us here at Steel Market Update.
Tim Triplett, Executive Editor
Tim Triplett
Read more from Tim TriplettLatest 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.