Final Thoughts

The discussions I have had today with my galvanized and Galvalume sources are advising me price depreciation is accelerating and the spread between hot rolled and coated base pricing is shrinking.

My channel checks are advising spot galvanized is being offered at $68.00/cwt to $85.00/cwt ($1,360-$1,700 per ton) on both hot rolled and cold rolled base. I am seeing a heavy weighting of numbers in the $70-$75.00/cwt range.

Hot rolled channel checks found $50-$55.00/cwt base being most prevalent, although some commented that sub-$50.00/cwt base pricing is possible on bigger tonnages.

The new numbers being collected will be reflected in next week’s SMU price ranges and averages.

I had a conversation with several foreign steel traders during the Tampa Steel Conference. We discussed prices out of Europe, Turkey and North Africa. The numbers there have risen by about $150 per metric ton over the last week or so. When adding freight, duties and tariffs, as well as some margin for the traders, hot rolled prices were now above domestic offers.

I spoke with one of my domestic mill sources today. I was told there are mills hungry for orders on both hot rolled and coated products. This is pushing prices lower. This particular source told me their mill was “happy” to sell coated products with base prices in the $60’s. It is still very profitable and way above levels seen prior to the pandemic.

At the same time, with foreign prices rising, there will come a point at which prices will bottom. Right now, there are a lot of foreign tons sitting at the ports or on the water. We learned at the Tampa Steel Conference that the warehouses at the ports are full of steel.

The expectation is that sometime during the second quarter of 2022 the market will plateau and we should expect a “bounce” off the bottom. There is a slowdown in foreign orders occurring now, and the result of steel buyers stopping buying foreign and moving to domestic will create a bottom and move prices higher. For how long is an unknown.

As I mentioned above, I just returned from Tampa where we conducted the 33^rd Tampa Steel Conference in partnership with Port Tampa Bay. The conference was a great success with more than 440 executives attending, great speakers, good weather, and excellent networking events. Our golf outing had 92 golfers, the harbor cruise on Tuesday morning was one of the best attended in the Port’s history, and the two networking cocktail parties were well attended as well.

Lourenco Goncalves was quite optimistic about Cleveland-Cliffs being able to get fixed-price contracts, at least with his automotive clients. We debated during the conference whether other mills would follow suit or if price volatility would continue as in the past.

My opinion is for prices to remain volatile. Even though there are fewer flat rolled steel mills, there continues to be competition as new mills come onstream and order books ebb and flow with inventories and demand. The high prices seen over the past 12-18 months have spurred on imports, which in turn have created high inventories. With high inventory levels, lead times have come in, buyers are able to sit on their hands, and prices become more volatile.

The 34^th Tampa Steel Conference will be held on Feb. 5-7, 2023. Save the date.

I am already working diligently on the next SMU Steel Summit Conference which will be held in person at the Georgia International Convention Center next to the Atlanta Airport (ATL). The dates are Aug. 22-24. We already have commitments from Lourenco Goncalves, Chairman, President, and CEO of Cleveland-Cliffs; Mark Millett, President & CEO of Steel Dynamics; Dr. Alan Beaulieu, Managing Director of ITR Economics; and Gene Marks, CPA, President of the Marks Group.

I anticipate 1,200 to 1,500 attendees this year. Registration is open for the conference and can be accessed by clicking here or going to:https://events.crugroup.com/smusteelsummit/home

Please note: The hotels registration link will be provided once you have registered. If you contact the hotels directly, you will be told they are sold out on those dates.

During the Tampa Steel Conference, we held a meeting of the steering committee for a NexGen Youth Organization (exact name may change in the future). I was very impressed with the quality of the individuals who volunteered to help form this group. You will be learning more about the group in the coming weeks and months. Stay tuned as we are quite excited to assist in attracting, training, mentoring, and keeping young people involved in the greater steel community.

This reminds me to remind you to look at the young people in your company and to nominate them for the NexGen Leadership Award, which will be announced at the SMU Steel Summit Conference in August. More details will be coming out soon.

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

John Packard, Founder of Steel Market Update