Final Thoughts
Final Thoughts
Written by John Packard
February 22, 2021
“Snowmageddon” did not help.
Steel buyers are telling Steel Market Update that last week’s “Snowmageddon,” as one buyer called it, has caused steel orders into the South and South Central sections of the United States to be pushed out an additional one to two weeks. “We’re seeing some adjustments arising out of last week’s weather with about a two-week push-out of orders,” one service center general manager said. “They had been slated as requested prior, so this would be [a] new delay. To the extent that there may have been some momentum building for the market to become less short, this weather delay may have added a couple of weeks to the process.”
Truck shortages are compounding the issue of late orders, according to one Chicago-based service center. “Mills generally are running two weeks to one month late. Truck shortages are creating more issues. We have ready material at mills for 2-4 weeks and can’t get mills to ship.”
Things are no better on the West Coast with one service center located there telling us that none of their suppliers were on time with deliveries. “That is a hard “NO!”; not a single mill is “on time” and I think that’ll be the case until the 2H.”
Foreign steel is getting more looks, but most buyers not located near a port are telling us the $100-$200 per ton advantage of foreign offers is offset by the risk associated with lead times going into mid-third quarter. As one steel buyer put it, “We are interested, but lead times of late Q3 are the barrier. Offers are $120-200 ton below domestic for May delivery, but too much risk. If automotive were to slow down (due to the chip shortage or otherwise), flat rolled prices could erode well beyond that and mills would still make money. Very risky.”
One steel service center executive made an interesting observation (not yet confirmed by SMU) that end users are pushing back “hard” against hot rolled prices above $1,200 per ton.
We also need to watch scrap prices. “There’s been a lull of late with $1,200 becoming the accepted market price, though some mills are reaching for more,” said one service center executive. “Scrap prices in March loom large, depending on what transpires. If we see a significant spike in scrap pricing, it will keep the pressure higher for the mills. If it surprises to the downside, we may see more price stability over the next month.”
Plate buyers are talking about a new plate price increase to happen soon. The expectation is for an additional $60 per ton to be added to the already high plate prices, which this week averaged $1,070 per ton.
The SMU Community Chat Webinar will return next week. On Wednesday, March 3, we will host Rick Preckel of Preston Pipe & Tube as we discuss the rise in oil prices and its impact on the energy markets. Preston Pipe & Tube is a recognized leader in covering the pipe and tube markets that include API, line pipe and oil country tubular goods. All of these are very steel intensive, and if the energy markets come back to life we could see further shortages of steel – especially in the hot rolled and plate steel arenas. The Community Chat is free and available to anyone. You do not need to be a Steel Market Update subscriber. You can register by clicking here or going to our website: www.SteelMarketUpdate.com/blog/smu-community-chat-webinars
We are conducting our first Steel Hedging 201: Advanced Strategies & Execution Workshop right now (Tuesday and Wednesday morning).
We will conduct another Steel Hedging 101: Introduction to Managing Price Risk Workshop on March 30 and 31 and you can click here to learn more about the agenda, instructors, costs to attend and how to register.
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
t this point in the game I think what we can say about Nippon Steel’s proposed buy of Pittsburgh-based U.S. Steel is that it will go through, it won’t go through, or the outcome will be something new and completely unexpected. Then again, I’m probably still missing a few options.
Final Thoughts
President-elect Donald Trump continues to send shockwaves through the political establishment (again). And steel markets and ferrous scrap markets continue to be, well, anything but shocking. As the French writer Jean-Baptiste Alphonse Karr wrote in 1849, "The more things change, the more they stay the same." (I thought the quote might have been Yankees catcher Yogi Berra in 1949. Google taught me something new today.)
Final Thoughts
President-elect Donald Trump will officially retake the White House on Jan. 20. I’ve been getting questions about how his administration’s policies might reshape the steel industry and domestic manufacturing. I covered the tumult and norm busting of Trump's first term: Section 232, Section 301, USMCA - and that's just on the trade policy side of things. It's safe to say that we'll have no shortage of news in 2025 when it comes to trade and tariffs.
Final Thoughts
Another presidential election cycle has come to an end. If you’re anything like me, part of you is just happy you no longer need to unsubscribe or “text STOP to opt-out” from the onslaught of political text messages this cycle produced.
Final Thoughts
With the US presidential election decided, ‘wait and see’ has quickly turned into ‘we’re about to find out.’ Following Donald Trump’s victory, I had a chance to sit down with Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI). He gave his thoughts on what he thought we might see in Trump’s second term in office, and what it means for steel.