Final Thoughts

Written by John Packard

“Vacation: An extended period of recreating, especially one spent away from home or traveling.”

Last week I took “vacation” time off, and unlike the definition above I did little recreating, rarely strayed from home, and did no traveling. How restful is that?

The big news from last week was an apparent “firming” of steel prices. I began getting hints early in the week as steel buyers told me offers were being raised and quotes were being pulled.  ArcelorMittal was being vocal with their customers that they wanted to see hot rolled at a minimum of $500 per ton ($25.00/cwt), which would be $40 per ton higher than the $460 per ton average Steel Market Update posted on Tuesday evening.

We adjusted our Price Momentum Indicator on all flat rolled (hot rolled, cold rolled, galvanized and Galvalume) prior to the official price announcements being made:

ArcelorMittal USA advised their customers of minimum base pricing of $500 per ton on hot rolled and $700 per ton ($35.00/cwt) on cold rolled and coated products.

U.S. Steel came in with a $60 per ton ($3.00/cwt) price increase across their products.

Nucor advised their customers they were raising prices by $50 per ton.

NLMK USA finished the week by advising their customers of minimum spot base prices of $520 per ton ($26.00/cwt) on hot rolled and $720 per ton on cold rolled and coated products ($36.00/cwt).

The mills are betting the combination of higher ferrous scrap prices for the month of May (yet to be determined but expected to be up $20-$30 per gross ton or more), higher order books due to large orders being booked over the last week to two weeks, end users coming in looking to “fix” pricing at the $440 or below HRC levels (around $30.00-$32.00/cwt on coated), and the closure of supply by all of the integrated steel mills which is going to create some room for price movement.

Steel buyers were speaking to me during the middle and later part of last week advising me that hot rolled was no longer available at $440 or below, and many of the new quotes were at $460 and higher. They also advised coated was now being offered at $33.00-$33.50/cwt base prior to price increase announcements.

One interesting scenario developing is how the individual steel mills are handling contract customers who pushed out tonnage or are out of compliance with the minimum tonnage requirements associated with their contracts. I heard of at least one mill telling their contract customers they had to “catch up” or have their contracts negatively altered.

Another interesting development is some mills are reportedly putting “floor” language in contracts. One steel buyer told me this evening, “I can’t give you details right now, but some contracts have floor language, and others don’t. Yet either way, mills might be claiming need (or force majure) to rationalize the need for a floor.”

Our flat rolled and plate steel market trends analysis from last week had 50 percent of the service centers reporting their company as dropping spot prices to their end customers. This is not yet at “capitulation,” which is when 75 percent or more of the distributors report that they are lowering pricing.

Supply is one side of the equation and demand is on the other side. Last week we saw historic changes in demand, at least out of our survey. Eighty-three percent of the distributors advised us that their manufacturing customers were reducing their orders. Two weeks prior to last week only 26 percent of the service centers reported manufacturing customers as reducing orders.

I also started to hear about foreign steel becoming attractive to steel buyers with one in the Southwest reporting hot rolled for July at $22.75/cwt delivered to their plant, cold rolled at $29.45/cwt loaded truck Houston for August delivery and a second supplier at $29.95/cwt delivered to their plant for the end of July delivery.

SMU Price Momentum Indicator is at Neutral as we wait to see if supply is in line with demand (and if we truly have a handle on exactly where demand is). For right now, the mills appear to be united in their push to firm the bottom and move benchmark hot rolled to $500 per ton.

Stay tuned to see if they succeed.

Market intelligence, and quality market intelligence are critical to companies trying to navigate pandemic infested waters. Steel Market Update takes seriously our responsibility to provide the most timely and accurate information as possible. We are fortunate to be owned by The CRU Group with their dozens of analysts and economists who work in tandem with the SMU team to keep our clients informed. I encourage our Executive level member companies to upgrade to Premium, or at least expand the number of your employees who are receiving our newsletters and gaining access to our website. You can learn more about expanding your membership or upgrading to Premium by contacting Paige Mayhair at or 772-240-1012 or Jill Waldman at or 330-570-6570.

The SMU “community” is important to us, and I think it is critical to the greater steel industry to stay abreast of what is happening. We are conducting FREE weekly SMU Community Chat Webinars every Wednesday at 11 a.m. Eastern Time (10 CT, 9 MT, 8 PT). With all of the changes happening at the steel mills, price increase announcements and questions about what the future holds for the industry, we are fortunate to have Bank of America metals and mining analyst Timna Tanners this week.  Timna may touch on her Steelmageddon theory, but the pandemic has created a whole new world of worry and opportunity for the industry. Come join us at 11:00 a.m. ET on Wednesday. You can register for our free webinar by clicking here.

You can also view past webinars by going to our website and looking under the SMU Community Blog tab on the top tool bar in our website:

I am in the office this week and can be reached at or on my cell phone: 770-596-6268.

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

John Packard, President & CEO

The post Final Thoughts appeared first on Steel Market Update.

Latest in Market