Final Thoughts
Final Thoughts
Written by John Packard
July 22, 2015
A quote from one of our Steel Summit 2015 keynote speakers, “Although the price of oil seems to be more tied to the dollar, there is some supply and demand factors that can impact the magnitude of the impact of the dollar’s value on the per barrel price. Therefore, we have to watch what the introduction of Iranian oil on the market will do to the price, and what happens if we get some sort of supply disruption. For now, the dollar is going to get stronger over the next few quarters and the price of oil is going to continue to go down.”
As Sandra Williams pointed out in her article about Nucor in tonight’s issue (above), the steel mills are stoked with the new wording they got through the U.S. Congress. There was a structural tubing trade case announced earlier this week. Over time, as HSS tubing inventories start to dwindle there will be an impact on hot rolled sales out of the domestic mills here in the United States. The rumor mill is flush with those who believe that there will be a cold rolled trade suit filed before the end of this month (we also believe that a suit will be filed). With the new trade language look for the mills to take an aggressive stance and perhaps pick on a lot more countries than what you would expect. We all know China will be hit but they won’t be alone. Hot rolled suits could follow in the coming months.
My fear is the steel mills will put U.S. manufacturing companies in a position where they have no choice but to move business offshore. I spoke with a manufacturing company about this just the other day and their opinion was not comforting for U.S. manufacturing.
This could lead to a very interesting discussion between Dan DiMicco, who will be a keynote speaker in the early afternoon on Day 2 of our Steel Summit Conference, and the manufacturing companies in attendance. I think they all agree that re-shoring or returning manufacturing to the U.S. would be a good thing. Where they may disagree is what place costs such as steel play in the equation.
Right after Dan DiMicco’s keynote will be our government and trade panel which may be the strongest single panel we have assembled for this year’s conference. We will have Kevin Dempsey of the AISI, Richard Chriss of the AIIS and trade attorney Lewis E Leibowitz to discuss antidumping suits (and there may be a lot of them by then), the new trade language and what is best for American workers and consumers.
Yes, you can still register for the conference. You can register on our website at: www.SteelMarketUpdate.com or by contacting our office at 800-432-3475. Yes, we do allow invoices to be sent out and payment by company check. If you would like a brochure with the program and other materials please send an email to: info@SteelMarketUpdate.com. Share it with your friends…
I will have more about my upcoming travels aboard one of the Interlake Steamship Company vessels on the Great Lakes in the coming days. The James R Barker that I was originally scheduled to travel was moved to another port to carry coal. So, we are working on schedules to see if I can get on another one of the 1000 foot vessels out of Minnesota.
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.