Recent Posts
Steeling The Signals: December Update
Broad-based indications of strength are evident throughout the steel channels and there appears to be increasing probability of upward movement in spot market prices (looking out 3-4 quarters). The contact narrative shifted to the unusual carbon sheet and plate supply constraints, heading into a normally seasonal-slow demand period, and future production deficit anxieties.
Nucor Corporation (NUE) issued earnings outlook that may be considered disappointing by The Street. Management provided a 4Q20 EPS guidance range of $1.02-1.07. The language within this morning’s release regarding Steel Mill trends aligns with the feedback collected from our checks. We also heard from Steel Dynamics (STLD) today, which issued an adjusted 4Q20 guidance range of $0.80-0.84, beating expectations. Continue reading
Steel: Pending Scrap Price Change + Supply Constraints * Price Increases = Trading Opportunity
We are calling a bottom and a carbon steel market inflection (and pricing). This is the main driver behind today’s positive trading call on the steel coverage group: Upgrades of Steel Dynamics (STLD) and Nucor Corporation (NUE) and a higher target price applied to Reliance Steel & Alum (RS). Continue reading
Steel: Demand Strength Justifies Increase Attempt, But Supply Is Coming – Oh Dear…Born
There appears to be early support for the latest mill price increase attempt on carbon sheet. After reviewing some of the signals coming out of the steel channel this week, we expect at least one-half of the attempted +$40/ton spot adjustment to stick. For the first time since January, our survey is showing a real demand push, in addition to the modest customer sourcing panic developing in the MW region. Continue reading
Steel: Mill Prices Are Falling; Lowering Forecasts On Excess Supply Risk
The carbon steel price retreat started a bit earlier than we expected. Mill quotes for the benchmark HRC product dropped below $500/ton, which should be considered another red flag for the steel mini-mills heading into the 2Q earnings reports. Against the backdrop of weak demand and the lack of buyer urgency, domestic producers are reacting to early restart(s) of previously-idled production capacity. The downturn in pricing seems to be more pronounced across the flat rolled categories. Continue reading