Comments on: Further Thoughts on Recent Pricing Moves; Limited Domestic Pricing Upside in a Top-Heavy Global Market

By: SMI

SMI — Sat, 07 Jul 2012 14:56:28 +0000

Long products in the US move very tightly with scrap; virtually every ton of longs in this country is made in an EAF. Last month scrap tumbled and longs tumbled less – so there was “sort of” a price increase. But flat pricing has become more volatile than longs because flats are still mainly blast-furnace made, and while blast furnace production is far more flexible today than it ever was, BF makers still can’t respond to this “on/off” environment, so they tend to cut production a little too much when things weaken – which causes a snap-back response on pricing – and they tend to bring back on a little bit too much production when things are strengthening which brings pushes prices back down. So the flat prices will bounce a little bit more than longs.

By: Me

Me — Sat, 07 Jul 2012 13:04:43 +0000

Steel is a business, if we look at prior to 2004 the price of steel was basically the same for a very long time, at the same time manufacturing costs in general rose tremendously, this ultimately ended up, with many steel companies closing for good.

These days we have almost every country in the world trying to penetrate the North American market, with lower pricing, whether it be by their currency being favourable, or by government subsidies, making it all the more difficult for domestic mills to be competitive in our natural markets, I believe that Nucor, and ArcelorMittal have taken the right approach to try and stop the price errosion.

My only question is why the increase on flat products, and not on long products?

Me.