Final Thoughts

Take a look at today’s issue: Lead times are still rising, for the most part. But the pace of gains has slowed.

Mills are, for the most part, not willing to negotiate. But, unlike a month ago, some are – especially when it comes to hot-rolled coil.

And scrap prices – contrary to expectations at the end of March – were mixed in April. They weren’t as high as hoped on the prime side, and heavy melt went negative.

If this sounds familiar, it’s because it echoes what we reported on Tuesday: that steel prices, after rising sharply following the invasion of Ukraine, had at the very least moderated and might already have begun to inflect downward.

These trends are supported by what we’re seeing in the macroeconomic data as well. Automotive sales are down. And nonresidential construction continues to be stymied by a shortage of skilled workers and high costs for steel, aluminum and wood.

Some market participants have noted that steel (unlike those other materials) has infrastructure spending on its side. To check on that, I asked an executive at a large service center whether his company was seeing evidence of infrastructure spending in its order books.

He started off with “demand really sucks.” That was not what I expected. And he suggested taking a look at raw steel production data if I had doubts.

He had a point: AISI figures indicate that raw steel production is down compared to this time last year and well below pre-pandemic levels in early 2020.

His take on infrastructure: “It’s always hard to find a federal infrastructure bill that links to more steel demand because infrastructure spending is so diffuse over so much time.”

Or, as Cleveland-Cliffs Inc. chairman, president and CEO Lourenco Goncalves said at a press conference at the company’s Indiana Harbor steel mill in East Chicago, Ind., earlier this week: “Now it’s showtime. We need to see the projects, we need to see the money deployed – we need to see red tape cut and things happening.”

“Some states are better than others,” Goncalves added.

My perhaps overly cynical interpretation is that asphalt, as it often is, will be the initial winner.

Oil – and demand for energy tubulars – are winners too, no doubt, especially with prices over $100 per barrel and gasoline over $4 per gallon.

But that comes at a cost, as CRU’s Greg Wittbecker notes in article that I think has some good lessons for steel. Namely, inflation at the pump – and at the grocery checkout – could hurt demand for durable goods.

Translation: You can’t eat steel (or aluminum for that matter).

But you can always enjoy the company of your colleagues in the steel industry at SMU’s Steel Summit. And John Packard, our founder, has a few words on that below.

SMU Steel Summit

Registrations continue to grow for the 2022 SMU Steel Summit Conference, which will be held at the Georgia International Convention Center located next to the Atlanta International Airport (ATL). The dates for this year’s conference are August 22-24.

The following companies have registered executives over the past few days (those with an * mean more than one person attending from their company): Emerson Electric*, North Shore Steel*, Rock Trading Advisors, Ltd, Southwark Metal, Steel and Pipe Supply, Steel Pro Trading, and Webco Industries.

We continue to add new speakers to the program with Bernard Swiecki, Director, Automotive Communities Partnership and Director of Research for the Center for Automotive Research joining our key industries panel.

We invite you to join the anticipated 1,200 decision-makers who will be in Atlanta to participate in the best networking and information gathering event for those involved with the flat rolled and plate steel industries. You can learn more about our program, speakers, costs to attend (and available discounts for SMU member companies and those bringing two or more people), and how to register by going to: https://events.crugroup.com/smusteelsummit/home

By Michael Cowden, Michael@SteelMarketUpdate.com