Final Thoughts

Final Thoughts
Written by John Packard
April 22, 2015
We appear much closer to the crossroads than I think many of you realize. Reliance, Nucor and Steel Dynamics spoke about the changes coming in their own way during their earnings conference calls. Reliance prodded the mills to raise prices – now. SDI spoke about their attorneys waiting for the right time before they can file successful dumping suits. Nucor talked about keeping foreign steel at bay and that it may be premature to file price increases. We live in interesting times and my personal opinion is everyone in the flat rolled steel industry needs to keep their eyes, ears and minds open to change.
I will go into more detail on what I mean in Sunday night’s newsletter.
Our Premium level members will see that this week’s flat rolled steel market survey Power Point will be posted on our website on Friday afternoon. We added a couple new questions this week regarding end users looking to lock in future orders at today’s pricing. Seems the results were mixed between end users and service centers…
We are getting down to three weeks before out next Steel 101: Introduction to Steel Making & Market Fundamentals workshop will be held in Merriville, Indiana (outside of Chicago). We encourage both our members and non-members alike to take some time to learn more about what we are trying to teach and how it may fit with your company or individual needs. Our program is on our website: www.SteelMarketUpdate.com or you are welcome to contact our office with any questions you might have: info@SteelMarketUpdate.com or 800-432-3475.
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
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.