- Today we're at METALCON 2022, and we're gonna be discussing
a steel market update here for quarter four going
into the end of the year. (upbeat music) What's up guys? Welcome to The Metal Roofing Channel. Welcome to Q and A Mondays. Today, we're doing a steel
market update for Q4 2022. We're here at METALCON Indianapolis. Today, I have Brett from Sheffield Metals and Dave from Mitsui. Thanks for being here guys. - Our pleasure.
- Yep. - So we're gonna start
by giving some numbers of where the steel market is right now and kind of where steel is sitting here. Again, we're in mid-October. - Oh, currently, as we
are sitting here today, you know, steel has
started to reduce in price from a correction
earlier from this summer. We had a, as you guys are very aware, we've had a steel run
up in prices in 2021, which is a very unprecedented year. Things have started to correct. So right now, if you
look at kind of July 1 to where we are today, you know, a basic hot oil black coil has kind of come down in
price to about $250 a ton. Influencing that are other factors though. We've still seen other commodities in other parts of the steel supply chain have risen in price. Things like freight and paint and zinc and other things components. But overall, that market
has kind of corrected from earlier this summer. It's kind of settling in
at this level here for Q4. - Awesome, and then once we talk about Sheffield Metals' prices, kind of where are we
sitting here with Sheffield? Where has it come down
from from the summer? What are we looking at? - Very similar to, you know,
spot pricing for hot roll. You know, roughly a 20,
25% reduction in price. I know we recently had a price reduction and our pricing follows in line with, for the most part, what
the mills are doing. - So can you tell us a
little bit about Mitsui? - Yes, Mitsui is a, you know,
international conglomerate. You know, we have offices
in over 50 countries across the world. One of our big segments is
the iron and steel division. And here in North America, our iron steel group is
headquartered outta Chicago. But we're basically, Mitsui as a whole, we're moving about 25
million tons a year globally. But then here in North America, we're supplying hot roll,
coal roll, coated coils and other non flat
carbon products as well. So, you know, we're, you know, have a lot of access and a lot of touchpoints and we're happy to be here with
the guys at Sheffield today. - Awesome, yeah, we
appreciate you being here. So talk to me about the
demand for construction and manufacturing for steel right now. What's that looking like
towards the end of the year? - So far it's been pretty stable. You know, there's been some irregularities in the automotive market,
which is a big steel consumer, but the construction market
has stayed relatively stable. We have our eyes on what
the interest rate changes are gonna do this a total
construction market. There's a lot of uncertainty
we think as we move into 2023 but we expect 2022 to kind of
coast into the end of the year and be indicative of what
else we've seen here in 2022. - Yeah, absolutely. And Brett, what have we seen
from Sheffield customers? You know, have you heard
anything about their, how busy they are, what
they're looking like at the end of the year here? - I think we've built up
quite a backlog of orders. Our customers I think are pretty solid through the end of this year. We're, we all have our
eye on, you know, 2023 and possible economic headwinds, but for the most part
things look pretty stable finishing off the year. - And if I'm a business owner,
you know, a steel consumer, someone that uses steel for my product whether it be roofing or whatever, you know, what do I do
with this information as we head towards the end of the year and kind of look for 2023 and kind of see that
uncertainty unfolding? - Well, you know, we
fundamentally don't believe that the steel industry
is gonna divert much from the macroeconomic industry here in the United States,
the general economy. But if I was a consumer
of steel right now, I would stay very close to your suppliers. You know, watch some of the
key metrics of lead time, scrap prices and other things. But stay very close to your suppliers, know your inventory levels, keep an eye on your working capital, especially with interest rate changes. But that would be our
fundamental recommendation. - Understood and Brett,
what would you suggest, you know, as far as inventory
levels for a customer? What should they kind of keep in mind as they're, you know,
booking new business, bidding jobs? What do you think about? - You know, obviously holding inventory of a commodity in a volatile, you know, economic time is
a very risky proposition. So we like to run our
inventories as lean as possible. We are buying what basically
our customers need. We're selling, you know,
what's coming in the door. We don't hedge, we don't, you know, take on any risks thinking
that the market might go up. - Yeah, I mean 'cause you know, a contractor or whoever might be able to, might get themselves in a bind you know, if they aren't
watching that pretty closely. What else haven't we talked about that we want to cover here? - I think when you talk about
looking forward to 2023, to be very candid, just most of the industry's
just very uncertain. We're in, you know, METALCON here, is very much a collection
of the industry minds from the mill side, the service center side, the OEM side and even the contractor side. We all come together here for
a few days in Indianapolis. So this is a great time to
talk to those resources. But the general consensus
we're kind of seeing for going 2023 is a very uncertain look. The indicators are not necessarily pointing in one specific direction. That dreaded recession word--
- Yeah. - Is being tossed out there. But even as you move around
here on the show floor, I think most people have a
cautious amount of optimism. You know, we don't see a
lot of pervasive pessimism. If you kind of stay away from the TV, you have a little bit
more cautious optimism for most of the people
we've been speaking to here. So we're cautiously
optimistic as well for 2023 for steel demand and steel consumption. - Yeah, absolutely. Brett, you know, that's a
great point about METALCON. You know, what have you seen, you know, walking the show
floor, talking to customers, anything new or
interesting that, you know, METALCON has kind of brought? - This is my first
METALCON, so I'm a newbie. I think the attendance
has been really good. You know, everyone and
anyone is here at the show. Made some good networking calls and been able to meet some new people that I think will benefit
our customers in the future. - That's awesome. So as we all know, we've
really experienced a lot of uncertainty and difficulty
in the supply chain. What does that look like going forward towards the end of the year and into 2023? - Well, I think through
the rest of the year, you're gonna see relatively
stability of what we see now. But you know, continuous to theme of
the uncertainty of 2023, there are some questions. The supply chains are not
necessarily completely smooth yet. Many of us hear about the
challenges the automotive sector because of computer chips, but we have some of those in the basic construction sector as well. There are some labor negotiations going on that are still ongoing with
some of the steel mills and their particular unions. That could be a disruption
to the industry. The national rail workers and the railways have not necessarily
reached an agreement yet. That could be disruptive
to the macro economy as well as the industry. We are seeing some new capacity brought on in 2023 in this steel industry. We think it will kind of be offset with some antiquated capacity
that might not come back. So the supply chain necessarily
disruption is not over. You know, we think people
are managing it better and learning to live with
some of those things better. We think it's a little smoother. The roughest patches
are probably behind us but there are still some challenges ahead and you know the steel industry
has always been evolving. It's very dynamic industry, even though it has a little bit
of a slow moving reputation, it has a relatively
dynamic pace within it. So 2023 could be very
interesting with respect to that. If all of these supply chain
things get smoothed out or we have a major disruption
like a labor situation or a rail situation. That can have very immediate consequences to the supply chain
for steel distribution. - Yeah, and that's why it's so important as you said earlier, to stay
close to your suppliers, really build that relationship so you can understand what's
best for your business. - It's something we value at Mitsui and I know Brett, you guys
value at Sheffield is, you know, knowing your customers,
knowing your suppliers, understanding their challenges, and try to form those true
partnerships out there for successful supply chain.
- Exactly. - We're really thankful for our relationship with Mitsui. You guys provide a wealth of knowledge and market intelligence and well, we look forward to continuing in that business relationship. - Absolutely, we value
it very much as well. - And make sure you stay up to date with everything happening
in the steel market. Subscribe here to The
Metal Roofing Channel for more updates just like this one. Do you provide any
information for your customers about the steel market,
anything like that? - Yes, we do. We put out a little
notice on Sunday evenings that Brett receives and others and it's just a kind of a, a general feel for the market. We don't necessarily go
too deep into the graphs or some of the other things that some of the larger paid services do. But we really pride ourselves in trying to give our customers and people in the steel
industry kind of a very hands-on opinion of what's happening
on a week-to-week basis. And that's our ultimate goal. - All right, well I appreciate it guys. Thank you so much. Comment down below if
you have any questions. As always, I'm Thad Barnette and we'll catch you next time. (upbeat music)
