Final Thoughts
Final Thoughts
Written by John Packard
March 13, 2015
We will begin a new flat rolled steel market analysis (survey) on Monday morning at 8 AM ET. There are lots of questions which are unanswered and we want to probe your thoughts on the subject. As I mentioned, invites to the survey will be sent out at 8 AM ET. If you receive an invitation to participate please take a few moments to click on the link contained in the message which will take you to our questionnaire which is hosted by SurveyMonkey.com.
The chatter over the last couple of weeks has been what needs to happen for domestic prices to bottom. There are a number of ways companies are responding to what has happened over the past couple of months.
There are a number of companies who are wishing for the end to come so they don’t have to sell off inventory at ever increasing losses. These are the companies who are “upside down” in inventory. They may have double bought when foreign import prices looked so promising. Or they may have bought heavy domestically in anticipation of dumping suits that never got filed.
There is another group of companies who believe prices have further to fall. They are looking at the rise of the dollar, the demise of iron ore (which started dropping again last week) and are watching domestic scrap prices closely. They believe scrap has more to fall. If scrap does indeed fall in the next month or two then they believe steel prices will continue to drop.
Then there are those who are ready to buy (or who are buying) at current numbers.
What camp are you in?
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.