As we round third and head home at this point in time of the year I think that it would be helpful to take stock and look for some indicators on where things stand in the market and the economy in general.
First off, my colleague Steve Zupon (here at Premium Steel Sales) has the following snapshot of the current pricing of flat rolled steel:
All categories up again this week
HR: Up $5/ton ($0.25/cwt) landing at $630 ($31.50)
CR: Always liking to get the leader, up $16/ton ($0.80/cwt) this week….Now at $825 ($41.25)
GV: UP pretty good too, at $12/ton ($0.60/cwt) increase, climbing to $870 ($43.50)
All these categories back to about August levels before the slight softening that took place in Sept/Oct…
All indications are that scrap will go up in January (likely about $20/gross ton)….let those hoppers fill up towards end of year and have them picked up after the holidays if you have the storage capacity.
Mills ran at 73% last week, up from 72% the week before….not much change, but significant in that didn’t go down…..utilization rates always fall at the end of the year as the mills let their books grow to add to the pricing pressure for 1Q…..I would look for them to be right back up to 75% after the holidays.
Domestic steel production is up by 8.5% year over year – where the U.S ranks number 3 in worldwide output.
Manufacturing numbers and confidence are up:
and for a more comprehensive picture of this and some very encouraging perspective see here:
So things look very optimistic and poised to really take off.
In the steel industry though, (this is anecdotal – I do not have any published pieces to support this) buyers seem to be gun shy for the meantime to pull the trigger on the large or even medium scale purchase of material as prices have risen. I cannot figure out what exactly is causing the hesitation as prices seem like they will be even further on the rise and now that tax reform has been enacted with a WHOPPING DECREASE IN THE CORPORATE TAX RATE DOWN TO 21% – things should take off like a rocket. Steel buyers may feel some serious remorse later…..
As an aside, just something to keep in mind: (I have given this some extensive thought lately) When we hear about a company that expects to add X amount of jobs over the course of X amount of years, it is no small feat whatsoever. A job usually means a full salary (often times this is plus benefits) and that means that the revenue the company expects to generate must be a significant amount greater (in multiple) of the overhead involved in the cost of that job for it to be worth it to add that job.
Now, back in November I quoted and analyst friend of mine who expressed concern that the economy was overheating and that bad news is hidden under a rock somewhere waiting to jump out and bite us:
At this point though, I have a different take on things: My suspicion is that people are so not used to things really humming that the reality of the economy doing well for an extended period of time is taking a while to really sink in. This might explain why we are seeing the foot dragging that I mentioned earlier here in the post. There really is solid footing for the robust economic outlook.
Now, you may say that I am a shill for President Trump, but let’s be honest with ourselves and give credit where credit is due: Thanks to Donald Trump for pushing congress to pass major tax reform and for the optimism that he has pushed from before he was even elected.
I would like to wish everyone a happy, healthy, and prosperous New Year!
To learn more about Premium Steel Sales, LLC and what we can do for you, check out the rest of our web site at: https://premiumsteelsales.com/
Ben Levi – Premium Steel Sales