Editorial

Bright light

By Corinna Petry

July 2014 - It’s like a bad hangover. Of the few producers that issue earnings guidance, AK Steel Corp. mentioned additional costs would be realized in the second quarter as a result of not receiving iron ore in a timely fashion. 

In our cover story this issue, we review the problems caused to iron ore movements by the long-lasting deep freeze on the Great Lakes this year, and the strategies that American steelmakers are employing to ensure greater access or control over this vital feedstock.

That weather-related anomaly marred an otherwise improving demand picture for steel. Charlotte, North Carolina-based Nucor Corp. and others project a second-quarter profit that is higher than both the first quarter and the identical quarter last year.

Speaking on the sidelines at American Metal Market/World Steel Dynamics’ Steel Success Strategies conference in New York City, service center executives told me their order books and shipments have improved and that they have been able, so far, to pass along and maintain higher prices—primarily because customers are well aware of domestic planned and unplanned furnace outages and lengthening mill lead times. Capacity utilization rates at sheet mills hover around 90 percent.  

But the higher than normal amounts of foreign steel that have been arriving on U.S. docks since April have led many steel buyers to expect a summer retreat for pricing. Said one attendee, “We’re getting offers several times a week for Chinese cold-rolled sheet at $33.00 (per hundredweight). I want to tell the traders, ‘Don’t do that!’”

AMM’s index price for hot-rolled coil as of June 23 was $33.50, or $670 per ton. Cold-rolled sheet typically is priced $100 to $120 per ton higher than hot-rolled, so the spot market price spread is shrinking, and there’s pressure on the other end from tapering scrap prices.

Longer term, speakers and attendees at SSS were bullish on steel demand, citing growth in such end-use markets as energy, automotive and truck, general manufacturing and even commercial construction. 

The U.S. is “a bright light” as its recovery from the Great Recession is ahead of that of the rest of the world, Steel Dynamics Inc. President and Chief Executive Officer Mark D. Millett said at the conference. 

The biggest obstacle to better times, as usual, remains the U.S. government, both attendees and speakers said. U.S. industries from miners to retailers are crying out for infrastructure improvements but, “In Washington, they feel all spending is bad,” Gerdau Long Steel North America President Peter Campo said of legislators. 

I fully expect our readers are able to balance the negatives with their own positive momentum. But if you’re seeking fresh ideas, please take a look at the innovations we feature this month, from the art of building relationships as practiced by ASD members, to cutting, leveling and scrap management technologies. 

In addition, we have revised and updated our Quarterly Market Report with snapshots of economic indicators and industry data that you can use to plan ahead. MM

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