On Friday, the Fed summed up its approach to inflation, which has reached its strongest rise in 40 years, by vowing to make every effort to restore price stability.
Interest rate hikes are in full swing and all markets have reacted instantly.
This suggests that the end of the year will not be easy and we will all have to think about how to continue doing business. We will have to build a system of purchases and sales based on the situation, which will constantly change. The market will be biased either towards increased inventories for individual products, or towards a sharp reduction in inventories. Therefore, the price can change in any direction, rise or fall.
At the moment, we already see how the cost of hot-rolled coil has already fallen below $1,000 per 1 ton in all markets, while the cost of scrap metal in all markets is less than $500 and continues to fall.
My opinion does not change and we will reach these prices
Hot-rolled coils in the USA will fall in price to $520-580
Hot-rolled coil in Europe will fall in price to $460-$520
This is my personal opinion based on what I have observed over the past 25 years and seen how it was. And what tells me that we will stop here and the most interesting thing is that many will not be able to buy at these prices. The reason will be one and it is fear, and suddenly it will fall even lower. Then only everyone will regret that they missed such an opportunity. In August 2020, when the cost was around $450 and not everyone was able to take advantage of this chance, and the price approached almost $2,000 and no one expected it.
Based on this, one must be prepared for the fact that the opportunity must be used to the maximum, this does not happen every day. The main thing is that the next chance does not have to wait five years. Maybe someone can afford it, I personally can't.
Now it's time to balance stocks, sell off all the illiquid assets that may have accumulated? Put in order and carry out the necessary care of the equipment and all tools involved in the production.
What happened has already taught us all to think about supply chains and sales.
Now is the best time to prepare and launch new projects, and this is the best time for business, so there will be a better entry point for both raw materials and finished products.
Thus, the ECB raised interest rates to zero for the first time in decades.