Final Thoughts
Final Thoughts
Written by John Packard
September 19, 2014
For those who are keeping track I will be in Arkansas tomorrow for the Big River Steel groundbreaking. It will be interesting to see for myself what all the fuss is about… More about the groundbreaking (and maybe some of the fuss) in Tuesday evening’s issue of SMU.
We have also been working on a special report on zinc as we believe the subject will be of keen interest to those of you who are buying galvanized, galvannealed, galfan or other coated products which use zinc to coat hot rolled or cold rolled substrate. We have warned our readers in the past that zinc pricing bears watching in the coming months.
We still have a couple of seats left for our next Steel 101 workshop which will be held in Ft. Wayne, IN on October 7 & 8. We will tour the SDI Butler, IN steel mill as part of our program. You can find our program, pricing and how to register on our website or, you are welcome to contact our offices at: 800-432-3475. We will close registration at the end of this week and start working on our next Steel 101 program which will be held in late January in South Carolina and will include a tour of the Nucor Berkeley steel mill.
I want to thank all of the steel mills who have worked with Steel Market Update and have allowed our Steel 101 training workshop to tour their facilities: NLMK USA, Severstal (both Dearborn – now AK Steel and Columbus – now SDI), SSAB, California Steel, ArcelorMittal Dofasco, Steel Dynamics and Nucor. We hope other mills will consider working with Steel Market Update and our educational program(s) in the future. I
I am going to keep it short this evening. Thank you again for your business which is truly appreciated by all of us at Steel Market Update.
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?