First off, let me bore you with with more news about steel prices being up and on the rise further – This from American Metal Market:
US plate tags seen on course to hit 3-year high
Jan 22, 2018 | 01:55 PM | Michael Cowden
CHICAGO — January is not yet over and plate prices in the United States, which are just shy of last year’s peak, appear on pace to hit a more than three-year high.
American Metal Market’s assessment for cut-to-length plate stands at $36.75 per hundredweight ($735 per ton), up 3.5% from per $35.50 per cwt previously. That means current prices are only 25 cents per cwt below the 2017 peak of $37 per cwt, reached last April.
And prices probably have nowhere to go but up, at least in the short-term, market participants said.
Mills are seeking as much as $38-39 per cwt for new orders as they continue to try to collect $9 per cwt in price increases announced since early November, when prices had fallen to $30 per cwt – only 25 cents per cwt above the 2017 low of $29.75 per cwt.
Plate prices last hit $39 per cwt in December 2014, according to American Metal Market’s price archives.
Imports down, rig count up
“Plate in particular is very strong,” one source at a national service center said.
Prices are pushing higher due to a combination of factors, including the mill announcements, a weaker dollar – which makes exporting to the US less attractive – and higher oil prices that have resulted in increased demand.
The US imported only 42,415 tonnes of plate in December, down 22.9% from 54,999 tonnes in November, according to data last updated by the US Commerce Department’s Enforcement and Compliance division on Tuesday January 16. And January’s number is poised to remain low, with only 18,628 tonnes licensed for import at US ports as of mid-month.
That drop doesn’t appear to be a short-term trend. US plate imports totaled 686,931 tonnes in 2017, down 32.2% from 1.05 million tons in 2016 and the lowest point for cut-to-length plate since 2010, according to the Commerce figures.
The US rig count, meanwhile, totaled 936 for the week ended January 19, up by 242 rigs from the same week last year, according to data from Houston-based oilfield services company Baker Hughes.
The rig count is a leading indicator of demand from the oil and gas sector, a key end market for steel plate.
“Oil is driving a lot of it,” the service center source said, adding that demand has also been steady from other markets in part because customers have been buying for stock to get ahead of announced or anticipated price hikes.
Are prices flying too high?
But others noted that the big upward move in prices has not been accompanied by a similar jump in lead times. Lead times currently average four to six weeks versus as little as three weeks in mid-October and early November, when plate prices swooned, but are a far cry from lead times of 12 weeks in 2014, when plate prices were strong.
“Price wise, it has made an improvement. Demand is of course something of a separate story,” one mill source said, predicting that demand would catch up to mill price hikes due to lower imports, low service center inventories and a new trade case against large-diameter line pipe, some of which is made from plate.
Demand could also get a boost from increased infrastructure in the US as well as in Mexico.
“There are a number of projects that we are aware of, and they [supply discussions] are getting more serious,” the mill source said, pointing to Mexico City’s new airport, which is slated to open in 2020 and is expected to be the country’s biggest public infrastructure project in 100 years.
But other sources said they thought the rush to raise prices was more about mills taking advantage of a supply squeeze than about any significant increase in demand.
“I don’t know what the endpoint is… It’s ‘Hey, [the price] is going up, lead times are going out and you better get your order in now,’” one Midwest service center source said of discussions with his mill representatives. While that kind of rhetoric is not uncommon from producers in a rising market, he questioned what was underpinning such bullish sentiment.
“It’s not being driven by demand. At least with the customer base we have, it is strictly supply driven – so everyone is concerned that this could be fragile,” the Midwest source said, noting that price increases that are supply driven typically fall apart more quickly than those driven by demand.
Who really cares anyway? Right? – See my post from last week:
This week though, I thought that I might showcase something fun and cutting edge:
Amazon just opened their first cashier-less store on the bottom floor of their headquarters in Seattle.
Pretty impressive huh? Of course having Amazon’s headquarters in your backyard is not all roses:
I would think that ultimately people are happy with the fact that there is a really serious and growing ecosystem which encourages more businesses, opportunities, and overall more choices for entertainment and recreation close by. Look. I was just in New York city last week. (I was born there and grew up in the suburbs – but when I go back, after just a short while, I begin to get crazy and feel a serious urge to back to sleepy Cleveland! :)) I don’t really get it BUT there obviously is some major attraction to being squashed into a really small space with 8.5 million other people – so…. whatever!
It is important to point out that states and municipalities also want to have these businesses locate within their boundaries:
Now, here is another story about the cutting edge of technology and what it means to our quality of life:
Did I give you enough to read and think about yet??
Here is what I think this all boils down to: It is not products that are driving the new wave of technological advance – it is harnessing the power of the compound effect of existing (and constantly developing / improving) technologies – coupled with artificial intelligence in order to make things easier, less time consuming, and of course, way more accessible for people.
For better or for worse, we are being encouraged to engage less in thinking about and preforming manual steps to address our physical (and psychological) needs and desires.
I will leave you with one question and one challenge:
Question: Steel has been produced the same way for a very long time. What will be the game changer in the production of steel by harnessing the power of developing and existing technologies going forward?
Challenge: How about a commitment to yourself – just once – to unplug from the grid completely for say? 12 – 24 hours and see how much it makes you appreciate the conveniences and high standard of living that we enjoy – AND what it feels like to appreciate some of those manual steps that are still necessary to take care of our basic needs??
To learn more about Premium Steel Sales, LLC and what we can do for you, check out the rest of our web site at: http://premiumsteelsales.com/
Ben Levi – Premium Steel Sales