Final Thoughts

For what it’s worth, the last USS price hikes we have on SMU’s price announcement calendar – and it’s possible we missed one along the way – are two up $100/st from October 2023. (Two in one week at that.) This year has been mostly a story of Nucor and Cleveland-Cliffs as far as price announcements goes.

The next question: Do other steelmakers follow USS? And what does Nucor do when it next updates its published spot HR prices on Monday? Nucor is at $720/st now. Does it go to $750/st?

Let the speculation begin!

Let’s start with some fresh data and news from today’s newsletter.

November scrap shows early indications of a “strong sideways” move. That might help put a floor under things.

But it’s hard to square a big move upward with some of our other data. Case in point: 93% of respondents to our steel market survey this week said that domestic mills were willing to negotiate lower prices.

We haven’t seen a reading like that since early July. Why does that matter? We started July with HR at $665/st on average. By the end of the month, the low end of our range had dropped to $600/st.

Where does up $30/st put U.S. Steel’s HR price? Depending on where you started, I’m going to guess roughly $750-770/st. We haven’t seen prices that high since April.

Then there is the matter of lead times. They’re down across the board. HR, CR, and coated lead times – while not terrible – are all back to the lowest levels we’ve seen since the July price swoon.

You could make the case that our survey data, which we collected Mon.-Weds., is backward looking. Maybe we picked up on some last-minute deal-making ahead of price hikes (assuming other mills follow). We’ve certainly seen that before.

Here come the tons

But, turning back to what we know now, it’s probably not surprising that lead times are down. Look at SMU’s fall maintenance outage calendar.

Many of those outages have concluded or will be wrapping up soon. And, speaking of U.S. Steel, as we get toward the end of the year, there will probably be more production from Big River Steel 2 (BRS2), the big capacity expansion the steelmaker is undertaking in Osceola, Ark.

It’s not like BRS2 flips a switch and another 3 million tons per year (tpy) comes into the market all at once. There will probably be trials and qualifications toward year end. And perhaps not a more significant ramp-up until Q1’25. Even so, those tons are coming.

Meanwhile, other newer mills – SDI Sinton in Texas, for example – continue to work the kinks out. The Fort Wayne, Ind.-based steelmaker said Sinton, which also has capacity of 3 million tpy, should be operating at 75% this quarter, up from 72% in Q3. And it should hit full capacity in 2025.

North Star BlueScope in Delta, Ohio, meanwhile, is settling into a similar run rate (~3 million tpy), following the addition of a third EAF and second caster.

It’s a similar story on coated, where there is also a lot of new capacity coming online. Maybe that’s why coated prices have been slow to respond to a massive trade case.

Then there is just the matter of the calendar. Lead times for hot rolled are around Thanksgiving. Those for cold-rolled and coated products are into roughly mid-December. In other words, when prices often cycle down along with industrial activity during the holiday season.

I’m not saying the increase is doomed

We saw a round of price increases in late July stabilize sheet prices and then spark a mini-rally that got HR back to roughly $700/st by late August. HR prices then held there for most of September and October before declining modestly in recent weeks. Maybe a fresh round of price hikes keeps tags from sliding again.

And as SSAB noted in its earnings call, US buyers tend to stay in “wait-and-see” mode ahead of an election. As for elections, remember the “Trump bump” in 2016? HR prices went from $480/st just before election day in early November 2016 to $630/st shortly after inauguration day in late January 2017.

Could we see TB2 this year? Or maybe a Harris High? (Give me a break. It’s late, and I’m struggling with alliteration and rhymes.)

Heck, you could probably make a case that we’ve been in a demand funk for the last couple of years (despite all the price volatility). Maybe that’s due to change in 2025? And what might drive that?

Whatever happens, I’m guessing the days of two $100/st increases within the span of a week are gone, especially with Nucor posting more incremental ups and downs on a weekly basis.

Tampa Steel Conference

Speaking of the new year (yes, that was a shameless segue), get ahead of the crowds and book your spot for the Tampa Steel Conference on Feb. 2-4, 2025. It’s peak season for tourism in Florida, and our room blocks (and rooms in general) tend to go fast.

Whatever the supply-demand situation is, we’ll have no shortage of things to talk about – a new president, potentially sweeping new trade policies, and whatever unexpected events might happen between now and then.

One thing is sure, if you’re in the Midwest like me, it’ll be a nice excuse to get out of the cold and spend a few days in the Florida sun with a few hundred of your best friends in steel.

You can register here. We’ll be providing more updates on speakers and the agenda soon. In the meantime, thanks to all of you from all of us at SMU for your continued support. We appreciate you.