Timna Tanners: I wanted to ask about — I wanted to follow -up and just — I know you mentioned that you thought volumes had hit bottom and prices were stabilizing. Do we have kind of the effect of the higher price from the — into the fourth quarter hitting in the first quarter? Or is that more of a second quarter phenomenon? So that was my first question — asking about costs from throughput from the hot-rolled side.
Theresa Wagler: Okay. Yes. So [indiscernible] though, you were talking about fabrication, you’re actually talking about flat roll. So the — we’re operating contract business lagging, let’s call it, two to three months. So the increased pricing that we saw in flat roll in the fourth quarter is going to be benefiting the first quarter from a contract perspective. And the 80% is — it’s really been pretty consistent all year for the flat roll operations. So we’ll see that benefit Q1.
Timna Tanners: Okay. That’s actually really helpful, but I was asking about fabrication and the throughput of flat-rolled price increases and the impact on margins on downstream. So if you could actually answer that as well, that would be great.
Theresa Wagler: Sorry, I’ll get this right eventually. From a cost perspective for the substrate for fabrication, they tend to have anywhere between call it, eight to ten weeks of inventory on the ground. That’s the same thing that they would have had coming into the first quarter. So you’re going to see some of that incremental price hike in the first quarter but you would have seen some of it in the fourth quarter as well.
Timna Tanners: And then if I could, just one last one. I know Barry talked about and Mark talked about customer inventories being low. So I just don’t understand that because I know that at least SMU actually had some really high inventories for December. So is that just not aligned with what you’re seeing? Or can you help me understand why the difference of narrative there?
Barry Schneider: Well, Timna, this is Barry. I think a lot of our relationships, especially with the galvanized and the pain at are very directly with customers. So we see our supply chains still needing to fill orders at a really good rate. So the MSCI inventories still are traditionally pretty low. But more to the point or specific OEM relationships are still pulling tons from us. And when we have conversations, the lead times haven’t changed at all with a vast majority of the business we do that is on these contract relationships. So I think what we’re seeing out there and the nature of our inquiries make us feel like that there is a real demand out there still underneath everything we’re doing.
Mark Millett: And just to add to that. I think generally, we believe we are just very, very constructive for 2024 relative to steel demand. And everyone gets a little excited by maybe a little backing off of hot-band pricing here of late. But for us, flat roll continues to be very, very solid. And maybe the macro indicators may not be overly constructive right now. The order input rate in January for us has been incredibly strong. And we would, as Barry said, suggest that supply chain inventories, not just MSCI or SMU, but just supply chain in general is relatively tight. And imports are not a material factor today and won’t be. We’re booked out for coated and prepayment, right? It’s very, very strong for us. And I think the — again, when you look at the — just the hot band pricing because coated, prepaint is all very, very, very strong still.
It’s just like recent cycles, and its more emotion than anything else, but you get that steep climb. You have exuberance hence to overshoot the market a little bit, and it just sort of retrenches itself a little bit. And I think that’s where we are today. And it’s not a signal as it used to be. It’s not a signal as the underlying — the structural underlying demand because there’s so little spot material transacted today. Just because you have a slight erosion in hot band price, it doesn’t mean to say that that’s reflective of where the demand is. So for us, demand is, as I said, very, very solid throughout our sheet mills. And I also see that long products is in a very, very solid territory. Would like to congratulate the team. They had record earnings and record volumes in 2023.
They’ve done an incredible job. They’ve changed the commercial approach somewhat. They’ve expanded their product portfolio, and that’s going to support higher through-cycle volumes going forward for the long product platform as well. So I think for us, [indiscernible] quite rosy.
Operator: Your next question is coming from Curt Woodworth with UBS.
Curtis Woodworth: Just wanted to follow-up on the fab pricing dynamic. I think at the start or maybe at the end of the first quarter of ’23, you talked about pricing in the back half of the year being down 10% to 15%, and you came in down 22%. And then I think for now two quarters in a row, you have talked about price stabilization. And obviously, you mentioned the order entry getting better. So would you be willing to provide any directional color on pricing? Like should we assume that the first half — that the backlog you’ve priced for the first half of this year is somewhat similar to where you were in the fourth quarter, which would be consistent with kind of what you’ve said in the past two quarters, that pricing has stabilized?
Mark Millett: Well, I never do well in Vegas. So I don’t think that given a projection is solid projection is perhaps sorry — perhaps right. But directionally, I do believe, again, that the underlying structural demand is there. If you look at — literally the last 18 to 24 months, you’ve seen these hot band pricing cycles, and they have not been driven by demand. They’ve been driven by motion, whether it be the threat or the anticipation of high interest rates and inflation and recession and all these sorts of things. They’ve been emotional pivots as opposed to demand for us. And all we can say is that we do believe strongly that the underlying demand is going to be sustained through the year, and that should support pricing.
Curtis Woodworth: Okay. And then in terms of — I think you noted the order entry in fab was the highest you’ve seen in the past six quarters, which is a pretty healthy statement. So I’m just curious, like what’s driving that? A lot of the data we’ve seen in terms of warehouse starts is still somewhat negative. I know data centers is growing in other areas. But how do you characterize kind of the composition of your end market composition of fabrication demand today versus maybe how that looked 18 months ago.
Theresa Wagler: Here you may have additional commentary as well, but we’re seeing a lot of incremental demand on the manufacturing side. We’ve been talking about onshoring that is actually happening, and that does have a good impact on the steel joists and deck market. We’re also seeing a lot of activity in the education side as well as in the, I’ll call it, pharma or health care. And then anecdotally, you have to separate warehouses from data centers. We’re continuing to see really good strength in the data center arena as well. Barry, I don’t know if there’s anything I’m missing.
