Final Thoughts
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Final Thoughts
Written by John Packard
June 11, 2021
I thought it would be an interesting exercise to take a look at benchmark hot rolled pricing over the past 12 months. I thought I would compare the numbers on a month-over-month basis to give everyone an idea of how steep the price increases have been. At the same time, we can think about the road back from whence they came and how quickly prices could collapse should that be the case.
HRC prices bottomed during August 2020 as the economy quickly bounced back after the initial shock of the Covid-19 pandemic. SMU’s HRC price not stands at $1,675 per ton ($83.75 per cwt), which is up $135 per ton from $1,540 per ton a month ago. All told, we have had 10 straight months of higher prices. The average increase over those ten months is $121.50 per ton ($6.075/cwt each month).
I do not recall any time during my 44-year career in steel when flat rolled prices continued to move higher for 10 straight months. SMU began collecting pricing data just prior to 2008 (see below), and the last market approaching the bullishness of this one was in 2007-2008. As you can see, that one was short-lived compared to what we are living through now.
A second trend to note is this: Every time there has been a big move up in steel prices, there has been a drop of roughly equal magnitude. In other words, prices either fall back to where they were when the rally started – or they fall even lower than that prior bottom.
The question we have ask ourselves now is this: Do domestic steel mills have enough control over their organizations to keep prices from eroding too far, too fast?
If you want to know the answer to that question, I suggest you register for the 2021 SMU Steel Summit Conference because we will have many of the key players speaking: Lourenco Goncalves from Cleveland-Cliffs, Mark Millett from Steel Dynamics, Leon Topalian from Nucor, Timna Tanners from Bank of America, and Josh Spoores from CRU. Plus, we will get the big picture from Dr. Alan Beaulieu of ITR Economics.
You can learn more about our conference program, speakers, NexGen Leadership Award (please take some time to nominate a quality individual from your company), costs to attend (live and virtual), and how to register by clicking here.
I am looking for suggestions… Every year we have a theme to the SMU Steel Summit Conference. I have not yet selected one for this year and I would like our readers to throw me their suggestions. So, what shall it be? You can send you suggestions directly to me at John@SteelMarketUpdate.com
This will be another interesting week for the steel industry. We will publish our Service Center Shipments and Inventories data (final report) to data providers tomorrow and to Premium customers on Tuesday. I can leak a head’s up. After getting all data providers in we saw inventories of flat rolled increase for the month of May. If you would like to learn more, you can do so by becoming a Premium member. Or, if you are a service center, you can be added as a confidential data provider by sending an email to Estelle.Tran@crugroup.com.
If you would like to become a Premium subscriber, you can do so by contacting Paige Mayhair at Paige@SteelMarketUpdate.com.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO, John@SteelMarketUpdate.com
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John Packard
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Final thoughts
Sheet prices didn’t roar back after Labor Day. But steel market news sure came out of the gate strong (or maybe chaotically is the better way to put it). First, the nearly $15-billion proposed sale of U.S. Steel to Nippon Steel exploded into the news. And when I say exploded, I mean that all sides seem to be escalating things now.
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Final thoughts
Welcome back from Labor Day, from Steel Summit, and from whatever fun you might have had over the long weekend. Personally, I enjoyed camping with friends and family near Starved Rock. No one starved, there were no major injuries, and we enjoyed the many splendors of Mystical Fire. (Speaking of which, does that have industrial uses? But I digress.)
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Final thoughts
I want to say a huge ‘thank you’ from all of us at SMU to all of you (more than 1,500!) who attended Steel Summit this year. We appreciate you taking time out of busy schedules to join us – whether that was up on stage, submitting thoughtful questions, or catching up over a drink and bite to eat. Also, a bit shoutout to everyone at SMU and at CRU who made this event possible. It’s no understatement to say that we have a fantastic team.
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Final thoughts
Day one and two of SMU's Steel Summit 2024 are officially in the books. We covered a lot of ground, and the agenda sure did deliver.
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Final thoughts
The big show is just about here. SMU Steel Summit will be getting underway on Monday. Where does the networking begin? I’d say at the airport. So don’t forget your business cards. And it can't hurt to wear a company golf shirt.