Final Thoughts

First, please note that due to the Thanksgiving holiday, the Steel Market Update newsletter will not be published on Thursday (which is Thanksgiving Day) and Sunday, Nov. 28. We will return to our normal publication schedule on Tuesday, Nov. 30. We want to wish everyone in the United States a happy, healthy Thanksgiving with family and friends.

I was speaking at length with a manufacturing company involved with the residential home construction markets and was advised that demand was “exceedingly strong” and was expected to stay that way through 2022. I was told business was so good that finished goods inventories had been depleted. With the issues regarding the hiring of new workers, they have been able to meet current demand but unable to refill the shelves.

SMU is seeing steel inventories as rising and getting back to what would be considered a normal level at most service centers. However, demand has not dropped off and is expected to continue to be quite strong as we enter 2022. I expect there are many other end-users who are unable to build back their shelves due to the inability to hire workers and produce more material.

What this is doing is helping to keep prices higher for a longer period than anticipated. We do expect prices to moderate, but we are not expecting a collapse of the market any time soon.

SDI filed a duty circumvention suit against Vietnam corrosion resistant steel (galvanized/Galvalume) late last week. The suit is unusual, according to trade attorney Lewis Leibowitz, as it focuses on hot rolled and cold rolled substrate from Japan that is being converted to coated products in Vietnam and then shipped to the United States. The suit alleges Japan is circumventing the duties they have on hot rolled and cold rolled for material shipped to the United States. In my conversation with Leibowitz, he told me the hot rolled duty for Japan was just reviewed and is 26%, and the cold rolled duty is over 70%.

Steel buyers of Vietnamese coated steels need to be aware of what substrate is being used to produce their coils. My understanding is duties would become effective at the point when the government makes their determination. This suit is like a circumvention suit filed a few years back against Vietnam when they were using Chinese substrate. In that case, the U.S. government ruled that converting the substrate was not enough to change the origin of the material. Our expectation is the government will rule in favor of the SDI circumvention suit.

These suits aimed at substrate and the conversion of slabs, hot rolled, or cold rolled coils where there are antidumping or countervailing duties in place against the producing country (or specific mills) are meant to stem the flow of steel from those countries by not allowing them to go around the system by sending the material to a third party for conversion.

Cleveland-Cliffs completed their $775 million purchase of Ferrous Processing and Trading Co., a Detroit-based ferrous scrap distributor. How steel mills work with their steel-consuming customers may change when it comes to scrap. At the 2021 SMU Steel Summit Conference, Lourenco Goncalves told our audience that Cliffs would be getting into the scrap business as they recognize how important controlling iron units is going to be in the future. Scrap and scrap substitutes will play a major role as the industry discusses decarbonization, and it will be a major player in determining steel prices as all these new EAF steel mills are built in the United States and Canada.

When looking at why you should attend the 2022 Tampa Steel Conference, one reason is because we will discuss scrap, scrap pricing, decarbonization and the ongoing changes to the domestic steel landscape. We have Lourenco Goncalves speaking one-on-one on stage with me as moderator and answering key questions from the audience on what moves may be coming next for the largest flat rolled steel producer in the United States. I can only advise you there is a good chance Mr. Goncalves will say something that might surprise our audience. You can find more information about the agenda, speakers, special networking opportunities (golf outing, cocktail receptions, boat trips), costs to attend and how to register by clicking here or going to: www.tampasteelconference.com

Our next SMU Community Chat Webinar will be held next Wednesday, Dec. 1, when we will welcome Jefferson Shaw, vice president of strategy for Evraz North America. This is the first time Evraz has participated in one of our webinars and we look forward to them discussing the new infrastructure bill, decarbonization, and many other relevant topics for the industry. You can register for this free webinar by clicking here.

Steel 101 Workshops for 2022

During calendar year 2022, you will have options when it comes to attending one of our Steel 101: Introduction to Steel Making & Market Fundamentals Workshops: Live and Virtual.

After a two-year absence, we will be returning to live Steel 101 workshops in 2022. Our intention is to host two live workshops and two virtual workshops during the year.

Our first workshop in 2022 will be a virtual event, which we will host on Jan. 11 and 12. You can find more details about this workshop by clicking here.

Our second workshop will be an in-person event in Memphis, Tenn., with a tour of the Nucor Arkansas flat rolled steel mill. The dates for this workshop are April 20 and 21. We will have more information coming out about this workshop once we have determined what hotel we will be using, etc.

Our third workshop will be virtual and will be conducted during the summer months (exact date TBA).

In October 2022, we will conduct our fourth workshop and the second live and in-person event in Corpus Christi, Texas, and we will be touring the brand-new SDI Sinton steel mill as part of that workshop. We will provide more details about this workshop once we get closer to opening our registration window.

You can find information about all our events by going to our workshop website: https://events.crugroup.com/steel101/home

As always, your business is truly appreciated by all of us associated with Steel Market Update.

John Packard – John@SteelMarketUpdate.com