Final Thoughts
Final Thoughts
Written by John Packard
February 28, 2014
Based on local news reports as well as information from Steel Market Update flat rolled sheet sources, the blast furnace issue at AK Steel Ashland was due to a break out at the bottom of the vessel. A break out is when molten pig iron penetrates the outer wall of the blast furnace. Since the crack(s) are reported to be at the bottom of Amanda (the name of the AK Ashland blast furnace) repairs are not easy and are expected that they will take a few weeks to complete.
On Monday we will begin our early March steel market survey. Invitations should go out around 8 AM ET. If you receive an invitation please take a few minutes, click on the link contained in the invitation and complete the survey.
We continue to gather information regarding our Fall 2014 Steel Summit. We have been thinking of making major modifications (length, content, location, dates, etc.) and we would truly appreciate your feedback. Here is a LINK to the survey which consist of 5 questions.
This is the kind of feedback we are looking for (if you would like to send me a direct email), “Please, please, please, don’t have any speakers talk about their own company in any way, not to discuss their approach to people, their approach to hedging, etc., etc. I’ve never seen/heard anyone do this in a way that wasn’t self serving and boring, sometimes mind numbingly so. Public companies can’t say much about their companies that isn’t already on their web sites and press releases and private companies love themselves too much.”
As I mentioned in Thursday night’s issue of SMU – I was impressed with the program and quality of the speakers at the FMA Toll Processors Conference. They had a nice mix of economic forecasts, educational programs and entertainment. I am thinking of reducing the exposure to steel mills and other companies who, as the person who made the comment above said, are self-serving and don’t add any value to the group. So, your comments do make a difference.
If you would like to send something directly to me you can do so at, John@SteelMarketUpdate.com.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
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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?