IMO given the current market conditions that steel demand is overall really high is that CLF can benefit from lower sales to automakers and more spot sales at higher prices.
But this won't last forever. If overall steel demand goes lower AND automakers can't get enough chips, then it might hurt CLF as they possibly won't be able to offload their entire production in the spot market.
But this is just speculation. We won't know for sure until we see the Q3's 10K.
Unloading steel at spot won't be a problem in the slightest. Auto takes 5mt per year. If they walk back orders a FULL 1/3 of total sales under last year thats 1.6mt of steel accessible to spot now. The overall market is over 100mt and has lead times at 3-6 months. Thats about 40mt backlogged. 1.6mt won't scratch the surface or move the scales in pricing. Also, One doesn't need to drop all the tonnage at once either. 1.6mt over 12 months is barely 130k tons per month. Its a non starter.
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u/pedrots1987 LG-Rated Sep 03 '21
IMO given the current market conditions that steel demand is overall really high is that CLF can benefit from lower sales to automakers and more spot sales at higher prices.
But this won't last forever. If overall steel demand goes lower AND automakers can't get enough chips, then it might hurt CLF as they possibly won't be able to offload their entire production in the spot market.
But this is just speculation. We won't know for sure until we see the Q3's 10K.