Final Thoughts

When it comes to sheet prices, nearly all respondents to our survey report that mills are willing to negotiate lower.

When it comes to geopolitics, the war in Ukraine is still raging. And tensions in the Taiwan Strait are at their worst point in decades.

I could tick off the macroeconomic headwinds. But you know them already. Inflation is running at its highest rate in my lifetime, and the Fed is raising interest rates to combat it. While rate hikes might be necessary, they come with the considerable downside of depressing consumer demand.

And steel prices have been falling since late April – more than 3.5 months. No one likes someone delivering that message. We’ve had some tell us that our prices are too high, others that they are too low – and still others that our ranges are too wide.

This time last year, there were very few complaints about pricing. Remember that distant galaxy when the question was not whether we would hit $2,000-per-ton ($100-per-cwt) HRC but when?

What are the silver linings to all these dark clouds? I could give you reasons you already know. Infrastructure spending should be more of a factor in 2023, the automotive industry should (finally) get its chip act together, and so on.

But that’s cold comfort if you’re looking for reasons to be optimistic right now. So I’ll leave you with this small reason for hope. Did you look at HRC lead times?

Here’s something we didn’t expect to see today. HRC lead times inched up a bit this week. Why is that news? We haven’t seen HR lead times do anything but fall since mid-April.

One week does not make a trend. But remember that lead times are often leading indicators of price moves. And maybe, just maybe, this is an early sign of prices plateauing – or at least slowing their decline.

I’m curious to see when we next release lead times two weeks from now whether that slight increase in HR lead times proves to be meaningful or just a head fake.

What is your take – is this week’s increase just noise, or does it reflect what your company is seeing in the market?

By Michael Cowden, Michael@SteelMarketUpdate.com