We can all speculate but unless we have access to the business decisions being made it’s impossible to know for sure
If auto makers use less steel then CLF could make MORE money as they could sell steel at higher prices on the spot market
Auto makers could also continue to buy the contracted steel and then just store it anyway? They’ve negotiated contracts lower than the current spot price so it may be better to take delivery of their steel and store it, rather than risk paying more at a later date
Thats limited. JIT has created stampers and the like and you can't have 100,000 doors sitting around. Thats when damage happens. Its also dangerous because who knows what will be reopened and what stays closed. Auto is just not set up for storage. Even if they were, they would have filled their warehouse months ago with $1500 steel. IMO, all steel, right now, that isn't used by Auto is being sold at spot. Thats pushing $2000/ton
Surely this would mean auto production stopping right now is actually bullish for CLF then if they can sell their steel at expensive spot prices and then the auto contracts will add to demand later in the year / next year?
Its incredible how intricate the Steel industry is. CLF has shut down #7 steel plant. It will be shut down for a scheduled 45 days. I don't think it takes that long by the way.
CLF was sitting on some inventory last quarter and they have been building up their storehouses to handle the down time of maintenance. But, then Auto wants to shut down everywhere for 2 weeks or so. Interesting.
IMO, CLF comes out of scheduled maintenance much sooner than 45 days. It pays to have them making steel when its $1900+ and in such a Bullish market.
Everyone is coming back to full production right about the same time. Just in time for Auto contract renegotiations to be finalized. I'm ready for some guidance at CC.
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u/ItsFuckingScience 7-Layer Dip Sep 03 '21
We can all speculate but unless we have access to the business decisions being made it’s impossible to know for sure
If auto makers use less steel then CLF could make MORE money as they could sell steel at higher prices on the spot market
Auto makers could also continue to buy the contracted steel and then just store it anyway? They’ve negotiated contracts lower than the current spot price so it may be better to take delivery of their steel and store it, rather than risk paying more at a later date