Final Thoughts

We haven’t seen gains of this magnitude since the first quarter. And some market participants continue to say that more mill increases, probably hefty ones, will come at the first indication of the United Auto Workers (UAW) strike ending.

The Market Has Bottomed

Lead times have extended. Our average lead time for HRC is about 5.5 weeks, or late November. And some mills are into December already. In other words, Q4 is close to being a done deal.

On the scrap front, prime prices were sideways this month. And scrap market participants told SMU this week that October might prove to be a bottom for prime.

We haven’t crunched our service center inventory data yet. (That goes out to our premium subscribers on Monday.) But many of you tell me that inventories are lower.

And imports probably aren’t going to ride to the rescue, not in the short-term anyway. I’ve heard from some of you that Canadian mills, which had been lagging US mills in pricing, are now around $700 per ton as well. It’s a similar story in Mexico, you might save a few dollars – but not much more than that.

Some of you have pointed out that cold-rolled and coated imports from South America, Southeast Asia, and Europe might be competitive, especially if you’re talking thin-gauge coated products. The catch: some of that material might not arrive until March.

Sound familiar? It’s in some respects a repeat of what we saw last year.

Higher prices, longer lead times, scrap firming, low inventories, and low imports – all of this suggests that the $645 per ton was saw in late September might turn out to be the low point of the year for US HRC prices. And for the next few months at least, US mills might have the wind in their sales.

How Durable Is the Floor?

I can see the logic to that case. I can also see why some of you are still skeptical.

There are some significant wildcards to consider – the UAW strike, the risk of a wider conflict in the Middle East, and the potential sale of U.S. Steel.

I was skeptical of the idea of a UAW strike ending soon – especially after the big escalation we saw on Wednesday night. I still am.

But some of you reason that the UAW striking the most profitable plants of the Big Three – like Ford’s Kentucky Truck Plant – is, counterintuitively, an indication that the end is near. Striking the truck plants might be the grand finale, so to speak.

Perhaps. We’ll see, in what has become something of a Friday ritual, what UAW president Shawn Fain has to say on Facebook Live.

I think the concern I find most convincing – or at least easiest to get my head around – are worries I’m hearing from some of you about 2024 demand.

You reason that lead times stretched out because of widespread mill outages and because of some consumers making large, speculative buys at what they thought was the bottom of the market.

What happens once all those maintenance outages are complete? And what comes after all those big, speculative tons are processed? Is there enough day-to-day demand to continue to support longer lead times and higher prices?

Let me know what you think. And, in the meantime, thanks to all of you for your continued support of SMU.