Final Thoughts

I was relieved to see the Sentiment 3MMA trend break after dropping for almost five straight months (since mid-September). I am not quite yet ready to say we have vanquished any growing pessimism within the flat rolled steel industry. But, breaking the streak was the first step.

I have a number of concerns. The continuation of huge amounts of foreign steel imports is a worry. It just means it will be that much longer before inventories are stabilized at the service centers. I spoke with the owner of a mid-sized service center this morning and he told me he was concerned about the amount of inventory he was holding for some of his contract customers. He is not worried as the inventory is all committed but, when prices drop as fast as they have, you have got to start to wonder if some of your tons are being supplanted by spot tons out of a mill or another service center. If that is not what is happening, then the higher inventories are due to changing demand at that particular customer. That may actually be an even larger concern to this service center.