Final Thoughts
Final Thoughts
Written by John Packard
March 28, 2014
Friday was a sad day at Sparrows Point as the dismantling of the facility took on the BOF (basic oxygen furnace). There was a controlled demolition of the BOF on Friday. Essentially, this leaves only the blast furnace to be destroyed. One of our instructors who lives close to the Sparrows Point facility told us the Star of Bethlehem which sits atop the blast furnace will be removed and given to the local community prior to the destruction of the furnace.
As I mentioned above in the very first article – this could be a very interesting week in the flat rolled steel industry. This is not a week to ignore what is going on around you. If you have information regarding specific mill positions, status of orders out of any of the affected mills or other information you would like to share, I will be in the office all week. You can reach me by email at: John@SteelMarketUpdate.com or by phone at: 800-432-3475.
Also mentioned above – this week is the week steel mills will be negotiating with their scrap suppliers. The expectation is for scrap prices to move higher which, even before the USS situation, could have played well into another move higher by the domestic steel mills.
Our next Steel Market Update steel survey will begin on Tuesday morning of this week. I appreciate those of you who respond to our invitations to take our surveys. This will be an important week on many different levels.
For those of you who use “Rare Earths Minerals” such as Tungsten and Cobalt and would like to get material out of China – our iron ore and steel trading contact has access to these materials and is looking for customers in the United States. If you have interest please send me an email to: John@SteelMarketUpdate.com and I will link you to my trading contact.
Once again, SMU thanks you for your business which is truly appreciated.
John Packard, Publisher
Advertise with Steel Market Update – learn more by clicking here.
John Packard
Read more from John PackardLatest in Final Thoughts
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?