Final Thoughts
Final Thoughts
Written by John Packard
December 13, 2013
The marketplace is buzzing as to why the mills east of the Rockies have not yet made a price increase announcement. Someone mentioned to me last week that ArcelorMittal could not push prices higher without attracting attention to themselves due to the announced purchase of ThyssenKrupp Steel USA.
AM does not want to be accused of price fixing. We also heard last week from a number of Nucor customers who felt that Nucor would not be the price leader as they have upset a number of their contract and previous contract customers during the negotiation process. The Nucor customers felt that if the mill made an announcement it would just be rubbing salt in an open wound. U.S. Steel generally does not like to go public with their price announcements. AK Steel and Severstal led last time and still have announcements out there which did not gain traction or support from most of the other mills. SDI never leads with price announcements. This leaves NLMK USA and a couple of conversion and smaller mini-mills.
We would like to hear from our readers – both as to what you think will happen over the next few months as well as what the domestic mills are telling you in their communications with you.
Steel Market Update will conduct our last steel market analysis beginning on Monday of this week. If you would like to be added to our invitee list please send me an email: John@SteelMarketUpdate.com.
I want to take a moment to congratulate Brett Linton who officially graduated from college today. Brett was our first employee hired and he will continue on with Steel Market Update as a full time employee now that his studies have been completed.
As always we want to take a moment to thank you our customers for you business and your recommendations to others to try Steel Market Update. Your business and kind words are truly appreciated.
John Packard, Publisher, Steel Market Update
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?