Final Thoughts
Final Thoughts
Written by John Packard
January 16, 2015
While speaking with a couple of the secondary flat rolled steel distributors this past week, we got into a discussion about the advanced high strength steels (AHSS) and what impact they were having on the secondary market. A number of service centers pointed out that the product was fine for flat parts or those with a 90 degree bend. The product has been going into some construction products such as wall ties and edging. The issue is not the original form or bend put into the steel it is the secondary process such as knockouts finds the material too hard to work.
A secondary service center in the South told us regarding high strength steels, “New HSS products constitute an ever-increasing share of secondary steel and they are problematic because their physical characteristics make them unsuitable for many of the typical non-prime applications. These products are in some ways reverse engineering the supply chain for secondary users. It represents an opportunity for customers who can use these extremely hard steels, but a dilemma for those who cannot as the available pool of commercial grade steel diminishes. When the market tightens at some point in the future, those who have not adapted their processes to accept these new grades may well find themselves with limited sourcing and premium pricing for what limited amounts of material they are able to obtain. This trend to HSS does not appear limited to automotive, but is occurring in other segments as well.”
Something for both the supply chain and end manufacturing companies to think about. There is both a challenge to the existing supply and an opportunity for those companies who find alternative end uses for these new steels.
I will be traveling to Charleston, SC tomorrow and will be at our Steel 101 workshop on Tuesday and Wednesday. I expect to return to the office on Thursday.
We will have an excellent article on the energy market in Tuesday evening’s newsletter. I expect the article may come as a surprise to many of our readers.
We will conduct our next flat rolled steel market survey beginning on Monday morning. Look for your invite around 8 AM ET. If you are not receiving an invite to participate in our survey please shoot us an email at info@SteelMarketUpdate.com with your name, company name, position and email address. All responses are kept confidential.
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
We just wrapped another Steel 101 Workshop, where you take what you learned in the classroom into the steel mill.
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.