Final thoughts

What comes next for the steel market?

Depends on who you ask. I spoke to a service center executive who said conversations around demand at Summit – whether along the sidelines or at the bars – were a collective shoulder shrug. The market isn’t good. It’s not bad… It’s just kind of “meh.”

Yes, a lot of capacity will come out of the market because of planned fall maintenance outages. But that will also depress scrap demand, which could lead to modestly lower scrap prices in September. And mills appear to have been increasing production ahead of those outages, according to AISI figures. So the downtime might not have the outsized impact some have been hoping for.

Could sheet prices continue to inch upward as they’ve done since late July? Yes. But there remains no obvious catalyst to send them significantly higher absent something unexpected.

What might that unexpected thing be? There is always the possibility of a big, unplanned outage. (That said, the market mostly shook off the unexpectedly protracted strike at ArcelorMittal Mexico.)

Trade case watch

In this market and given that it’s an election year, I think the trade front might be the place to watch for the unexpected – and in coated flat-rolled steel in particular. There continues to be chatter that a coated trade case could be filed soon.

Maybe this week? Maybe next week? It’s often hard to predict the exact timing of those. But timing aside, the other question seems to be whether a coated case would be targeted at only one country, maybe a few, or whether it might “go big.” Think something like the tinplate case filed early last year that targeted eight countries.

As I’ve written before, my understanding remains that any coated case hinged on two things happening: (1) The Commerce Department determining that Vietnam remained a “non-market economy” (or NME), which would all for higher duty calculations, and (2) lower Q2 profits. Mills have checked both of those criteria off their list.

There had been an assumption among some that the case might target Vietnam alone given the focus on the Southeast Asian nation during the NME case and given how much its exports of coated products to the US have increased. I’m not going to float names of who else might be included. That said, you can pull the trade data yourself on coated imports into the US here. Take the top 10 exporters of those products to the US, and you’ll get a pretty good idea of who the potential targets might be.

What would the impact of a coated trade case be? Some mills will tell you that, yes, spot activity might be spotty. But they’re doing well with contract business. And if a trade case were filed, there would probably be some canceled orders for coated material abroad that would end up being placed domestically instead. That could tighten things up.

They might also tell you that, when it comes to hot-rolled (HR) coil, lead times average four to six weeks. That’s not stellar. But it’s a lot better than the three-week lead times some were seeing in July.

So perhaps buyers with inventory can afford to wait and see how things develop. Mills can be patient too. Modestly higher steel prices and modestly lower scrap prices? There are worse definitions of the “Goldilocks zone” for producers.

Of course, you could make the case that all the new coating capacity (including Galvalume capacity) that’s being built in the US could moderate the impact of even a big trade case. … In any case, I’m back at my desk from the wilds of northern Illinois and looking forward to watching how it all plays out.

Tampa Steel Conference

Now that Steel Summit has wrapped up, mark your calendars for Feb. 2-4, 2025. That’s when we’ll be holding the Tampa Steel Conference together with our partners, Port Tampa Bay.

We’re working on the agenda now. So expect to see more on that in the coming weeks. And if you have any topics you’d like to see discussed, let me know at michael@steelmarketupdate.com.

I appreciate your feedback. And, as always, a big thank you from all of us at SMU for your continued business.