Final Thoughts
Final Thoughts
Written by John Packard
March 23, 2013
On a personal note I want to wish Joel Mazur much success in his new position as President of CENTRIA. For those of you who do not know this, Joel Mazur was president of Winner Steel while I was still an agent for the steel mill (Winner Steel is now called Sharon Coatings and is part of the NLMK USA group).
Our next Steel 101: Introduction to Steelmaking & Market Fundamentals workshop will be held in Canada in early June. We have just received confirmation from ArcelorMittal Dofasco that our group is welcome to tour their fully integrated steel mill. Our workshop will be headquartered at a local Hamilton, Ontario, Canada hotel. We will advise the exact dates in early June for the two day workshop once the mill has advised us of their maintenance schedule. Hamilton, Ontario, Canada is located across the border from Buffalo, New York. U.S. citizens will need to bring your passports to cross into Canada.
We still have openings in our next Managing Price Risk workshop which will be held in New York City on April 26th. Details can be found on our website: www.SteelMarketUpdate.com or you can contact our office: info@SteelMarketUpdate.com
By the way – has anybody seen spring anywhere…?
Thank you to everyone who completed our steel survey. Next one will begin on April 1st (no kidding).
As always we truly appreciate your business – thank you.
John Packard
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Final Thoughts
Steel equities and steel futures fell hard after news broke earlier this week that the US and Mexico might reach an agreement that would result in the 50% Section 232 tariff coming off Mexican steel. The sharp declines didn’t make much sense, especially if, as some reports indicate, Mexico might agree to a fixed quota. They didn't make sense even if steel flows between the US and Mexico remain unchanged.
Final Thoughts
Even before the news about Mexico, I didn’t want to overstate the magnitude of the change in momentum. As far as we could tell, there hadn’t been a frenzy of new ordering following President Trump’s announcement of 50% Section 232 tariffs. But higher tariffs had unquestionably raised prices for imports, which typically provide the floor for domestic pricing. We’d heard, for example, that prices below $800 per short ton for hot-rolled (HR) coil were gone from the domestic market – even for larger buyers.
Final Thoughts
I want to draw your attention to SMU’s monthly scrap market survey. It’s a premium feature that complements our long-running steel market survey. We’ve been running our scrap survey since late January. And over just that short time, it’s become a valuable way not only for us to assess where scrap prices might go but also to quantify some of the “fuzzy” indicators - like sentiment and flows - that help to put the price in context.
Final Thoughts
I think there is an obvious case for sheet and plate prices going higher from here. That’s because, on a very basic level, the floor for flat-rolled steel prices, which is typically provided by imports, is now significantly higher than it was a week ago.
Final Thoughts
We're about to hit 50% Section 232 steel tariffs. What could happen?