SMU Data and Models

SMU Survey: Trade Suits Will Push Steel Prices, Question is When?

Written by John Packard

Steel Market Update (SMU) conducted our mid-August flat rolled steel market review this week. We received our final responses this afternoon and we are ready to report on a number of the subjects covered this week.

Buyers and sellers of steel are of the opinion that the trade suits on hot rolled, cold rolled and coated products will impact steel pricing. When asked their opinions on whether the trade suits on flat rolled will push prices higher 77 percent responded “yes” while the balance of 23 percent responded “no.”

Approximately one third of all of the respondents to this weeks market analysis questionnaire left behind comments to this particular question. It appears to be a hot button within the industry at the moment:

“If domestic goes up, so will foreign. The question is why will increases stick as raw material costs are flat, along with Chinese economy?” Trading company

“I don’t see how it will in a significant way, I look at it as zero-sum — more demand domestically comes only as a result of less demand internationally, so how does that increase demand on raw materials, the true global commodities behind this?” Service center

“Will take a long time. Will be appealed to the WTO. Perhaps down the road.” Service center

“Maybe, but not anytime soon. Demand is stagnant, there is a real overcapacity situation in the US, and there is no guarantee that the trade suits will be successful. What we really need is an economic recovery in the rest of the world.” Service center

“Not until late 2015 or into 2016.” Service center

“The filings alone will slow down imports, but the final rulings (penalties dealt to each specific country) will determine whether or not the domestics will be successful in raising prices.” Service center

“That was the whole point to begin with. It may take until 2nd qtr before it becomes a reality. Demand is too weak at this point and lead times are too short.” Manufacturing company

“My opinion is it is a strategy by the mills to keep current pricing or perhaps slightly higher pricing due to high levels of domestic inventory in anticipation of steel workers strike which is not likely either. There is nothing to lose and all to gain from filing trade lawsuits.” Manufacturing company

“My expectations are 1Q2016 price will start to rise; possibly by December. HR imports except for Mexico will dry up by Nov/Dec and start moving prices higher. Vietnam is active in market now so CR/GALV pricing will continue to stay suppressed.” Manufacturing company

“No way you can eliminate so much tonnage from the market without an impact on prices.” Service center

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