Final Thoughts
Final Thoughts
Written by John Packard
August 7, 2014
Earlier today you should have received a special issue newsletter about our upcoming Events – Steel Summit, Steel 101 workshop and Managing Price Risk II. There is a ton of information in that newsletter and you are welcome to forward it around the country. Probably the one thing of the most interest is who is attending our conference – we address that subject in that newsletter and we have a partial list of the companies on our website in the Steel Summit section.
There is a lot in tonight’s issue so I am going to keep my final thoughts to a minimum.
The rumor being spread around the steel industry today was that dumping suits would be filed by Monday of next week or certainly no later than September 1st. It is my opinion that the timing of a flat rolled dumping suit wouldn’t make sense right now. Here is my reasoning: 1) the industry is at very high selling prices compared to the rest of the world and historically. The glass ceiling has been $700 ($35.00/cwt) hot rolled and $40.00/cwt base galvanized. We are currently bumping against those ceilings. The domestic mills should be making good money at these price levels. 2) In the last issue I did a very quick and not up to legal standards analysis of the Chinese domestic cold rolled price vs. that of the domestic steel mills. Based on my crude calculations it seems like it would be a stretch to say the product is being sold below Chinese domestic levels. My understanding is the number I used (Shanghai) is one of the higher priced markets in China and other areas may actually be cheaper (thus making the case of dumping below domestic numbers even more difficult). 3) Logic tells me that the domestic steel mills will wait until after the ITC makes their final determinations on the OCTG case. I believe the ITC ruling is due around the 20th of August. 4) The domestic mills have actually got the trading companies running away from the Chinese suppliers just by using the rumor mill. 5) If that is indeed the case (traders not offering new Chinese material) we should see lower imports of CR and coated coming out of China in the coming months. If not, it is because the Chinese mills may take the importer or record position and thus the risk of duties will be on their shoulders and not the trading companies.
Again, the reasons provided above are my opinion and my opinion certainly doesn’t have any pull with the domestic steel mills. If they are indeed committed to file suits they have the right to do so.
On the flip side the domestic mills may argue that the Chinese mills are owned by the government and thus subsidized. Secondly, they may argue that the Chinese mills (and others) exports are “surging” (and I will have to ask Mr. Schagrin and Mr. Leibowitz what constitutes a surge at our Steel Summit Conference…).
We will publish our latest flat rolled steel buyers/sellers survey results on our website for our Premium Level members sometime during the day tomorrow (hopefully by noon). If you have any questions please do not hesitate to contact me.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
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