Final Thoughts
Final Thoughts
Written by John Packard
May 28, 2014
SMU was told this afternoon that AK Steel has finally “caught up” on their hot rolled and cold rolled orders and, as our source put it today, “was out looking for orders.” There was no reference to AK dropping pricing at this time. We were told the mill was still sold out on coated products. Nonetheless, it is worth watching to see if AK becomes the first to break ranks with the other mills.
I asked a number of mills to comment about the surge in cold rolled imports into the United States. I couldn’t get any of them to comment. We either got a “no comment” back or, in the case of one domestic mill, and advisement that they were not involved in any “action” at this time. It will be interesting to watch the mills should the Chinese continue to ship massive amounts of cold rolled and coated steels. As I mentioned in an article earlier in this newsletter, even some of the companies who admit to being foreign buyers are surprised at the price levels being offered and the number of tons coming in.
In looking at the US Department of Commerce import license data which was update as of May 27th, we are seeing the Chinese mills beginning to surge (for lack of a better term) on galvanized with April being twice that of March and 3.5 times what was shipped to the USA in April 2013. The May license data suggest the month will be at least as great as April on HDG and could actually be quite a bit higher.
Galvalume, which is listed under “other metalliic,” and is a much more of a “niche” product in the U.S. compared to galvanized, has DOC license data showing China penetration as growing. Last April (2013) China shipped 907 net tons of the product to the U.S. One year later the number has grown to 17,207 net tons and license data for May suggest that number will be achieved again and perhaps exceeded.
Of the 3.7 million net tons of steel exported to the United States during the month of April (Preliminary Census Data), China with 416,721 net tons is the number 3 supplier behind Canada (546,883 net tons) and Russia (504,892 net tons). However, the number three ranking is a bit deceptive because almost 400,000 net tons of Russia’s number is slabs going to the domestic steel mills.
We don’t normally following long products but, we found it interesting that over 50 percent of the wire rod imports into the United States during the month of April were from China (123,327 net tons out of a total import number of 221,963 net tons).
It is a time for everyone to be aware of everything going on around you – supply, scrap prices, China, foreign imports, demand, new products, steel prices – all of these subjects will be touched upon during our September 3 & 4, 2014 Steel Summit Conference.
We will not have a presentation on the HRC and BUS Futures markets – to learn more about hedging strategies and how to properly execute trades you may want to look up our Managing Price Risk II: Strategies & Execution workshop which will be held in Chicago on June 24 & 25, 2014. Details are on our website or you are welcome to contact our office at 800-432-3475.
As always your business is truly appreciated by all of us at Steel Market Update.
John Packard, Publisher
John Packard
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