Final Thoughts
Final Thoughts
Written by John Packard
October 10, 2014
We are in a very interesting market as many factors are influencing domestic scrap and steel prices. We discuss currency issues in tonight’s issue as the appreciating dollar means less competitive exports out of the United States but it also makes foreign steel imports more attractive to buyers. We have falling iron ore (which is also impacted by a strengthening dollar) and, as one of our scrap sources explained it in another article in tonight’s issue, scrap appears poised to make a fundamental move lower. Just how low scrap can go is open for debate.
With iron ore prices below $80 per dry metric ton (dmt) for 62% Fe in China, scrap moving down $20 and foreign steel potentially seeing prices fall (we heard recent offers of HRC into Houston at $570 per ton), we expect domestic steel prices will continue to be under pressure. Our Price Momentum Indicator is now set at Lower.
In my “opinion” it will be important that the domestic mills woo as much contract business as they possibly can for 2015. The spot market could get ugly as time goes on and the dollar continues to strengthen and steel mill inputs continue to fall (and foreign steel continues to be a major factor).
Our next Steel 101: Introduction to Steelmaking & Market Fundamentals workshop is open for registration. The workshop will be held in Charleston, South Carolina on January 20th and 21st of next year (2015) and will include a tour of Nucor Berkeley. Details can be found on our website. As with all SMU workshops and conferences, Steel Market Update member companies receive a discount against their registration of $100 per person. We also have discounts available for those sending more than one person (an additional $100 per person discount). We won’t promise blue skies and 80 degree temperatures in Charleston in January but it will be warmer than Chicago and much of the northern portions of the United States and all of Canada.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Founder and Publisher
John Packard
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Final thoughts
We got a little flack for adjusting our sheet momentum indicators to neutral last week. To be clear, we didn’t adjust them to lower. Part of the reason we moved them to neutral was because there are some unusual cross-currents in the current market. On the news side, you could make a case that there should nowhere to go but up.
Final thoughts
I think all of us know that sometimes courtships go wrong. A misplaced word or deed and soon things can go sideways, and not in the prices sense. Such could be the case with Japanese steelmaker Nippon Steel’s play for U.S. Steel.
Final thoughts
We’re starting to see some impacts of the big trade case filed last week against imports of coated flat-rolled steel from 10 nations. Namely, we’ve heard that a range of traders have stopped offering material from Vietnam. An alleged dumping margin of nearly 160% will do that. Especially amid chatter of critical circumstances.
Final thoughts
The phrase “political football” has been tossed around a lot lately. (Pun probably intended.) For the humble journalists at SMU who thought the week following Steel Summit would prove a quiet one… the news cycle had other ideas
Final thoughts
Sheet prices didn’t roar back after Labor Day. But steel market news sure came out of the gate strong (or maybe chaotically is the better way to put it). First, the nearly $15-billion proposed sale of U.S. Steel to Nippon Steel exploded into the news. And when I say exploded, I mean that all sides seem to be escalating things now.