Final Thoughts

Everyone is searching for clarity. We are searching for clarity as well. There are many moving parts affecting the current market, and we are not sure what the future is going to look like just a few months from now. With Putin’s war against Ukraine, and the sanctions imposed by the United States, Europe, and other allies around the world, the landscape is littered with pitfalls for steel buyers here in North America.

The head of a Midwest-based service center expressed some concerns he was having with his customers who he described as being “nervous” and “emotional” about the potential impact of the latest Black Swan Event. I was told their customers are looking for more steel, even though inventories are balanced, or a bit on the high side (SMU has flat rolled inventories at service centers at 2.7 months supply). If customers build inventory out of an emotional response to the war (and threats of higher steel prices in the future) this could lead to a negative market later this year (assuming the war in Ukraine will be over within the next 90-120 days).