Final Thoughts

The spread between hot rolled and cold rolled/coated steels continues to be at dangerous (my opinion) levels. The U.S. steel industry has been systematically “building a dam” (Lewis Leibowitz words) around this country in order to prevent what they call unfairly subsidized and unfairly traded plate, hot rolled, cold rolled, galvanized and Galvalume steels. The combination of restricting domestic production with the close-down of the hot end (steelmaking) at AK Steel Ashland and US Steel Granite City along with the affirmations of dumping being reported by the U.S. Department of Commerce has taken U.S. steel prices out of sync with the rest of the world. The domestic mills are getting short term benefits but, the long-term consequences could be quite a different story.

“The high domestic pricing is causing our customers to look offshore for their products and you can’t blame them. We can offer the best service and delivery but when offshore goods are 25% to 30% below our costs, we can’t compete.” This quote was left behind by a manufacturing company as they participated in our mid-July steel survey. Our Sentiment Index high optimistic trend has been broken and we will have to wait and see if there are long-term consequences to the building of the dam without balancing the competitiveness of the domestic manufacturing industry.