Steel Market Update spent time over the past few days speaking with trading companies and customers who buy foreign steel to see if the flow of orders has subsided or remains in place. We were especially interested in cold rolled and coated products (galvanized and Galvalume in particular) since so much has been made about the possibility of dumping suits.
What we have found is a mixed bag from the trading companies and end users we spoke with on the subject.
There are definitely a number of trading companies who have seen their order books shrink as the price of domestic steel has come down and become more competitive than foreign offers, and much more competitive against incoming steel ordered a few months earlier.
On trading company salesman recently told SMU that he was spending more time trying to convince his customers not to cancel foreign tons than trying to sell new tonnage. This was especially true for hot rolled coil.
However, as the market begins to potentially turn, the “risk” of buying foreign steel becomes less of a factor and, in fact, it may actually increase the number of foreign tons purchased as buyer hedge against rising domestic steel prices.
When asked if his trading company was seeing reductions in tonnage with the narrowing of the spread, one west coast based salesman told SMU, “Reductions? No… If folks believe we’re near the bottom, buying offshore even at modest discounts, is still a meaningful strategy.”
Yesterday, we spoke with a service center executive who had been telling SMU for a number of months that once he was sure the “bottom” had been reached that he would buy some foreign tons. He admitted that he has recently purchased foreign cold rolled from Europe. Part of the order is for a customer and part of it is a hedge against domestic prices going higher between now and later this year when the tonnage arrives.
A trading company salesman who represents Korean and Chinese mills selling galvanized and Galvalume steels was actually surprised when we suggested that their order books may be impacted by the narrowing of domestic and foreign pricing. We were told that the customers they sell did not have nor, in his opinion, could they develop relationships with the domestic mills that would be at prices competitive enough to allow them to grow. He told us that the customers purchase bare and prepainted galvanized and Galvalume and the only way they can compete with their larger competitors was by buying cheaper foreign steel. The orders continue to flow unabated.
However, there were trading companies who spoke out against those companies who are selling Chinese material at below market prices, “CR/coated.. China is still offering, and is ridiculously low, even in the spotlight. As I’ve said before, the traders are as much you blame here. Although if/when cases fly, many of these same traders already have alternatives lined up to replace the idiocy of China. So Africa, Turkey, etc. This type of trader reminds me of the movie Boiler Room….”
We did speak with a trading company who admitted they, and their customers, are shying away from Chinese steel. This has impacted their order book which they termed slower than normal.
SMU spoke with an end user that we know is an active buyer of foreign steel. We were told that one of their South American suppliers is sold out through the month of July – but they would be looking for export tons for August…
A Southern European mill told us that they were unable to compete on hot rolled with the numbers coming out of Mexico and their order book was down.
Based on what we have been able to gather it appears that the two products of most concern to the domestic steel mills: cold rolled and coated products will continue to see imports at high rates for a number of months.
While speaking to an end user they advised us they were being told that a cold rolled dumping suit could be filed at any moment…
Time will tell.
John PackardRead more from John Packard
Latest in Steel Markets
October steel exports fall to 2023 low
US steel exports declined for the second month in a row in October, falling to the lowest monthly total so far in 2023.
November import licenses fall to recent low
A count of November license applications suggests steel imports were at their lowest monthly level in 33 months.
Dodge Momentum Index inches down in November
The Dodge Momentum Index (DMI) slipped in November due to a general decrease in slightly weaker commercial and institutional activity, according to the latest Dodge Construction Network (DCN) data.
Carbon border tax proposed in revival of Clean Competition Act
On Dec. 6, US Senator Sheldon Whitehouse (D-RI) reintroduced the Clean Competition Act, an environmental trade directive that would impose charges on imports from more carbon-intensive manufacturers.
Global steel production inches up, China’s falls in October
Global steel output inched higher from September to October, even as production declined in China, the World Steel Association (worldsteel) said in its latest monthly report.