Final Thoughts
Final Thoughts
Written by John Packard
September 18, 2015
As we have mentioned in a recent article, there has been an intentional change in the scope language associated with the cold rolled and hot rolled antidumping and countervailing duty suits. The change in the language appears to add parts that are not part of Chapter 72 of the Harmonized Code (iron and steel). Of concern to manufacturing companies is that the scope language may include some manufactured parts that were previously not included.
We received a copy of the petitioners (steel mills) responses to comments made to the U.S. Department of Commerce regarding the changes to the scope comments. The domestic steel industry asked that the US DOC ignore the comments and not to allow any exclusions to the cold rolled suit.
We will have much more detail about the scope language and how it could impact manufacturing companies, service centers and even some steel mills when we get into the hot rolled case.
This subject will also be covered in depth at our new Leadership Summit Conference which will be held in Palm Beach Gardens, Florida in early March. We will have more about this new conference intended for corporate executives in future issues of this newsletter and on our website. I will tell you that the idea behind the conference is to go into more depth in a few subject areas to the point where the attendees have actionable information that they can take back to their offices. This is not for everyone and we are going to limit attendance so that each person can receive as much one on one information, responses to questions, etc.
For those of you who may have been debating about attending a Steel 101: Introduction to Steel Making & Market Fundamentals workshop we still have seats available for our October 6-7th workshop in Davenport, Iowa. We will be touring the SSAB mini-mill. Information is on our website or you can contact our office: 800-432-3475 or info@SteelMarketUpdate.com
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
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.
Final Thoughts
We're about to hit 50% Section 232 steel tariffs. What could happen?