Final Thoughts

February 24, 2021

Steel prices will likely stay elevated until supplies catch up with demand, say the experts, so is there enough foreign steel on the way here to make a difference?

Two out of three respondents to a recent SMU survey said foreign offers are very competitive versus domestic prices. With steel prices in the U.S. at record highs–SMU puts the current price for hot rolled at $1,210 per ton–foreign mills have been able to offer deals priced lower by $200 per ton or more. But they come with months-long lead times and the risk that domestic prices will be cheaper by the time the steel arrives. Yet, a growing number of SMU readers tell us they are taking the plunge and placing foreign orders—if only to make sure they will have enough steel to meet their customers’ basic needs.

Steel imports into the U.S. are on the rise. Commerce Department data shows that monthly licenses for hot rolled imports through Feb. 24 are already 35% higher than the tonnage that arrived in all of January. Buyers tell us they are sourcing material from Turkey, Russia, South Korea and Europe. But comments from SMU readers reflect widespread skepticism that imports can possibly loosen the tight supplies enough to move the needle on prices:

“Import volumes being brought in are very small and will not make a dent in the shortage of steel in the U.S. for some time.”

“The problem is, unlike in 2018, there is not enough volume of imports to save the day.”

“The level of imports we see being offered and that people have committed to are nowhere near the volumes we need to find a balance of supply and demand.”

“The imports won’t do it. Only additional domestic capacity will relieve the shortage issue.”

“There are fewer tons coming in than most people assume. They will help balance the situation, but demand is strong enough to absorb most imports.”

“Imports deals are harder to conclude due to future risks, and this will only get worse in the next few months. Those buying imports regularly are going to ride this up and ride it down.”

“I’m not sure if imports are enough to turn the supply/demand imbalance. However, they could have a psychological impact.”

Much depends on how domestic steelmakers react, or overreact, to the new competition from imports later this year. As one cynic observed, “The U.S. mills are always the last to know that they’ve lost the market.”

Coming Events

It’s time to register for the next SMU Community Chat. On Wednesday, March 3, SMU will host Rick Preckel of Preston Pipe & Tube as we discuss the rise in oil prices and its impact on the energy markets. The Community Chat is free and open to all. Register by clicking here or going to our website: www.SteelMarketUpdate.com/blog/smu-community-chat-webinars

SMU also will conduct another Steel Hedging 101: Introduction to Managing Price Risk Workshop on March 30 and 31

Look for SMU’s reporting on Ryerson’s latest earnings call in Sunday’s issue.

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

Tim Triplett, Executive Editor