Steel Mills

SMU Packard Speaks with CEO's from SDI, Nucor & Cleveland Cliffs

July 25, 2021

Last week our average price on hot rolled coil (HRC) was $1,850 per ton ($92.50/cwt). We are not far away from $2,000 per ton ($100.00/cwt). The idea of HRC at $100.00/cwt is so far out of my historical perspective. I go back to the late 1970s when HRC sold under $10.00/cwt…. Jeez.

I saw an interesting note in the Financial Times today that referenced comments made by Valdis Dombrovskis who is the negotiator for the EU regarding the Section 232 tariffs. Essentially he believes the EU will not be able to remove all of the Section 232 tariffs as the Biden administration is keen to protect the U.S. steel industry. We need to watch for “other solutions” than a wholesale elimination of the tariffs.

The next two weeks are going to be hectic as I focus on finalizing the agenda for the 2021 SMU Steel Summit Conference (Aug. 23-25), and as I talk with each of the speakers about their presentations. We have a strong program (as always) and all of the speakers are looking forward to getting back to a live presentation. There is something special about feeding off the energy of the crowd.

I asked two mill CEOs last week when they believed the EU Section 232 tariff issue would be resolved? One said by the end of September and the other said by the end of the year….

Late last week I spoke with the CEOs of Nucor, Cleveland-Cliffs and Steel Dynamics. All three will be sitting down with me one-on-one (fireside chat style) at this year’s Steel Summit Conference. I can tell you, based on the conversations I had last week, Topalian, Goncalves and Millett have different opinions on a wide range of topics. I will also speak with Cesar Jimenez who is the CEO of Ternium Mexico and I expect his perception may well differ from the other three.

Topics to be discussed include spot pricing, and whether this market has legs to last well into (or through) 2022. We will discuss how we got to where we are today, demand, supply (especially the impact of new supply), Section 232 (and other duties/tariffs), and the topic at the top of every mill’s list right now – decarbonization/sustainability.

Lourenco Goncalves told me Cleveland-Cliffs’ money is supporting the drive to get all 25,000 of their employees vaccinated against COVID-19. If the company achieves its goal of 85%, every employee receives a $3,000 bonus (total pot is worth $75 million).

We will have a strong decarbonization/sustainability program during the Steel Summit Conference. The panel consists of Phil Bell, president of the Steel Manufacturers Association (SMA), which is the organization that represents most of the electric arc furnace (EAF) steel mills. Along with Bell will be Lynn Lupori (Head of Consulting from CRU), Steven Montague (CEO, Midrex), and Andrew Lichter (VP, Corporate Strategy & Development, Mobius Risk Group). Decarbonization or sustainability is going to be “THE” topic within the steel industry over the next 10 years (my opinion), and this is something every company is going to want to learn more about, and how it may (will) impact your company.

You can see the full agenda at https://www.events.crugroup.com/smusteelsummit/AGENDA and learn more about each of our speakers by clicking here.

There is still plenty of time to join the almost 900 executives who are currently registered to attend. You can join us in Atlanta for the live event, or you can stay home and stream the conference virtually. Registration for both can be found here: https://www.events.crugroup.com/smusteelsummit/register

The platform that will be used by both live and virtual attendees will open on Monday, Aug. 2. In the virtual platform, you will be able to access the registered attendees (live and virtual), and you will be able to email them directly from the platform. We will have more details about how to use our virtual platform (which is the same platform that was used for last year’s conference) during a special SMU Community Chat Webinar on Wednesday, Aug. 11 at 11 a.m. We will open registration for that webinar later this week.

On Wednesday of this week, we will host Bernard Swiecki of the Center for Automotive Research (CAR). Swiecki will be talking about what the electric vehicle revolution is going to mean for the auto industry. Swiecki will also be speaking at our conference as he provides his forecast for 2022 and beyond. You can register for this free SMU Community Chat Webinar by clicking here.

On Aug. 2 & 3 we will host one of our SMU Steel Hedging 201: Advanced Strategies & Execution Workshops with Spencer Johnson of StoneX. You can learn more about this two half-day workshop by clicking here.

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

John Packard, President & CEO, John@SteelMarketUpdate.com