Final Thoughts
Final Thoughts
Written by John Packard
January 14, 2015
I am looking forward to traveling to South Carolina for our next Steel 101 workshop which is at the beginning of next week. I would like to recognize and thank Nucor and their Berkeley facility for allowing us to tour their flat rolled (sheet) and beam mills. This is the first time I personally will have visited Berkeley and I am looking forward to seeing their operation in person. We have a diverse group attending our Steel 101 workshop (as always) which I think adds depth to the learning process.
I expect to finalize the date for our next Steel 101 workshop which will be held in the Chicago area. We will have more details about that in Sunday evening’s issue.
Ray Culley (former GM of Marketing for Severstal NA) and I are working diligently on our management level workshop which a number of you have heard me reference in the past as “Steel 201.” We will name it something different but both Mr. Culley and I are quite excited about the program we are putting together. One of the basic principles behind this new workshop/seminar/conference will be that the attendees be able to leave the meetings with “actionable information.” We will have more on this new event soon.
A reminder that our Steel Summit Conference, our 5th Steel Summit Conference will be held on September 1 & 2, 2015 in Atlanta. Block the dates on your calendar now.
On a personal note. Some of you are aware that my son is a professional musician (commonly referred to as a struggling artist…). He is a percussionist and performs with a number of groups and solo. He plays jazz, indie music and contemporary music. On Friday of this week he will be performing with Fenoma Consort at the New Music Miami Festival at the CARTA Miami Beach Urban Studios. Fenoma Consort is a contemporary music group and you may want to listen to some of their music if you are not familiar with contemporary works.
I want to welcome the latest new members to Steel Market Update. We have had a rush of Executive, Premium and Corporate level new members over the past week. If any of you have any questions about how to best interact with our website or with us here in the office please do not hesitate to contact our office. We are open to questions and suggestions and we are always striving to get better. I can be reached at: John@SteelMarketUpdate.com or by phone: 800-432-3475. Remember to tell your steel friends about us…
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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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?