Final Thoughts
Final Thoughts
Written by John Packard
April 14, 2014
First, our questions posed to U.S. Steel remained unanswered as we reached the end of the day today. The last we heard they were running two blast furnaces at reduced capacities for each at Gary Works. It is not known exactly how many tons per day of pig iron or steel are being produced. Iron ore is (or will be) on its way to Gary Works as time progresses and the ice breakers are able to move convoys through Lake Superior, past Sault Ste Marie and ultimately into Lake Michigan. We have more about the status of the various vessels in another article in this newsletter.
There is no news coming out of Great Lakes at all. By the way, we did hear from one of our contacts at Hamilton Works who confirmed their substrate was coming from Lake Erie and their lines are all very busy. US Steel made the decision to shut down the blast furnace at Hamilton towards the end of last year.
We were briefly sold out of our Steel 101 workshop in Dearborn. Then we received a cancellation so we do have room for one more. You can find details on our website or you can contact our office for information: 800-432-3475.
We have the dates set on our Managing Price Risk II: Strategies & Execution. We will be holding the workshop at the CME Building at 20 South Wacker Drive in Chicago on June 24 & 25th. The workshop will begin at 1 PM on the 24th and will end on the 25th around 2 PM CT. We are working on finishing the details to put on our website as well as registration details. I hope to have these ready by the end of the week. If you have questions or want to get a spot at the head of the line you can do so by contacting our office: 800-432-3475.
Today is Tax Day in the United States. You have until Midnight tonight…
As always your business is truly appreciated by all of us here at Steel Market Update. Without you and your company we would not be paying taxes this evening…
John Packard, Publisher
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?