From Chip Shortages to Rising Steel Prices

On the May 6 episode of Cup o’ Joe, Ryerson’s Director of Risk Management and Commodities Hedging, Nick Webb hosted an interactive discussion on market conditions and driving factors going forward. Did you miss it? Watch the complete session here.

If you prefer to sip your Cup o’ Joe recap instead, check out the highlights below.

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The Shortage of Everything

Industrial metals are pricing at five-year highs and supply remains tight. It’s a scenario that is playing out across seemingly every commodity market worldwide, from lumber to corn.

Among the most significant, and with the potential to impact the steel market at-large, is the ongoing shortage of semiconductor chips. Webb discusses the announcement by Ford Motor Co. to reduce planned production by 50% in the second quarter due to the shortage and what it could potentially mean in the long run.

Could China Tighten the Reigns?

Global PMI (purchasing managers’ index) data shows that nearly all regions of the world are in expansion territory. But could China, which makes up 50-60% of the world’s commodity demand, slow this trajectory by tightening its credit conditions?

The Future of Carbon Steel Prices

Capacity utilization rates, which have been steadily recovering since the slowdown last year, have been slowly tapering off. What is the reasoning behind this and what could it mean for supply and demand dynamics?

Also, futures markets anticipate that carbon steel prices could remain higher for the next few months before easing up later in the year. But could that floor to which prices will fall be higher than previously anticipated?

Aluminum Prices Pace Higher

Aluminum prices continue to pace higher as the cost of ingot is up and the Midwest Premium has hit an all-time high. Webb says to keep an eye on freight rates and the potential long-term impact on aluminum prices. 

Nickel Prices Rally

Nickel inventories appear to be remaining abundant. So, why are prices continuing to rally? It could be the by-product of some larger market dynamics. Webb provides some insight.

Chrome or nickel? Which has the bigger influence on stainless steel surcharges? Webb weighs-in on how that answer may have changed over recent months.

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Certain statements made in this presentation and other written or oral statements made by or on behalf of the Company constitute "forward-looking statements" within the meaning of the federal securities laws, including statements regarding our future performance, as well as management's expectations, beliefs, intentions, plans, estimates, objectives, or projections relating to the future. Such statements can be identified by the use of forward-looking terminology such as “objectives,” “goals,” “preliminary,” “range,” "believes," "expects," "may," "estimates," "will," "should," "plans," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. The Company cautions that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact our business are: the cyclicality of our business; the highly competitive, volatile, and fragmented metals industry in which we operate; fluctuating metal prices; our substantial indebtedness and the covenants in instruments governing such indebtedness; the integration of acquired operations; regulatory and other operational risks associated with our operations located inside and outside of the United States; impacts and implications of adverse health events, including the COVID-19 pandemic; work stoppages; obligations under certain employee retirement benefit plans; the ownership of a majority of our equity securities by a single investor group; currency fluctuations; and consolidation in the metals industry. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth above and those set forth under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2019, and in our other filings with the Securities and Exchange Commission. Moreover, we caution against placing undue reliance on these statements, which speak only as of the date they were made. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise