Final Thoughts

I have been in New York City where one of the competitors of Steel Market Update was conducting a steel conference. There were a number of satellite mini-conferences surrounding the NYC event. I attended three of them: the CRU Steel Briefing, which attracted about 100-150 executives; the Bank of America Merrill Lynch dinner drawing a combination of investors, steel people, scrap execs and yours truly; and a private lunch hosted this afternoon by a manufacturing company with steel traders, futures brokers, a service center, analyst and me.

The biggest question was, what will it take for prices to bottom? In my opinion, it will be sooner than what I heard from various sources over the past couple of days. My opinion is driven by what we are seeing in our service center spot survey, inventories (not quite there, but moving lower), future foreign orders almost non-existent and mills getting close to marginal cost. I believe we will see an attempt to stabilize pricing in the form of a price increase announcement within the next few weeks. Whether it results in a dead cat bounce or takes hold (or fails), I do not know. However, we are asking our survey respondents to weigh in and provide their opinions. We will report on those results in Thursday’s SMU newsletter.