Final Thoughts
Final Thoughts
Written by John Packard
March 17, 2014
A busy past 24 hours in the steel industry as the steel mills begin to make moves to stop the downward spiral in prices. As is our norm, Steel Market Update adjusted our SMU Price Momentum Indicator from Lower to Neutral. This is something we have done when the steel mills as a group go out to the market and attempt to move flat rolled steel prices. We do not want to be viewed as hindering their attempt and we will evaluate their progress and adjust our indicator as to what we believe to be the appropriate direction prices will move over the coming 30-60 day time period. At this point, we do not think the increase is a slam dunk in favor of the steel mills.
I have been following a story regarding paint price increases out of Valspar and most recently AKZO Nobel. The two companies have announced a 4 percent price increase which is being challenged by many in the paint community (Valspar and AKZO may disagree with me). The increases are not to be collected until later this spring so we will continue to follow this story. If you have information which you would like to share on the topic please contact me at: John@SteelMarketUpdate.com or by phone at: 800-432-3475.
During my conversation with one of the mill rep’s I spoke with today – the subject of dumping suits came up (as in not yet filed). This mill rep was sure that there will be cold rolled dumping suits filed (soon) against China. This rep also felt it was only a matter of time on coated products. However, in a separate conversation with one of my sources I heard that one of the big mills is not going to support a dumping suit on coated products.
I want to take a moment to welcome our newest member companies to Steel Market Update. We thank you for joining our little group of fired up companies and I encourage you to interact with myself and my team. If you have items of interest, want to suggest a topic for us to cover or want to make a suggestion which you think will make us a better company – by all means do so. I can be reached by email at: John@SteelMarketUpdate.com and the company in general is: info@SteelMarketUpdate.com.
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John Packard, Publisher
John Packard
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Final Thoughts
We just wrapped another Steel 101 Workshop, where you take what you learned in the classroom into the steel mill.
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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.