I spent part of my day today speaking to buyers who are known to buy foreign steel either due to logistics reasons (too far away from a producing mill) or who prefer to have options for pricing reasons. What I found out is a number of countries involved in the trade suits continue to quote and ship products to the United States.
I found a couple of trading companies who feel comfortable that any duties that might be levied against their mill would be able to be handled internally. One trader who represented a South Korean steel mill on coated products told me that they continue to service their regular customers. They have raised their prices slightly to accommodate any potential duties they may have to pay but, they feel that their mill has not been dumping.
We also learned that a number of the hot rolled producers named in the suits also continue to quote although one buyer told me that he could buy domestic steel at reasonable numbers (around $400). We were told, “International HR is in bad shape. Lead times are short too [just like domestic steel mills]. Thus the aggressive offers.”
This buyer went on to tell us, “Offers under $400 – yes from domestic mills. But not buying because have no need for steel.”
When talking to coated buyers (and traders) we learned that the lowest offers are coming from South America with most pointing their fingers at Brazil. Brazil was one country that was not hit by the CORE (corrosion resistant) trade suits. One buyer told us, “As low as they seem, even their numbers are not a no brainer when we consider how negotiable the domestic mills are currently. Scrap dropping another $40-$50 in October will continue to change the complexion on EAF pricing.” This buyer went on to say, “We aren’t buying much as this dangerous ‘falling knife’ market persists.”
We learned that most, if not everyone, is staying away from China.
We will work more on this subject in the coming days.
I am off to Davenport, Iowa on Monday as we produce of next Steel 101 workshop in cooperation with SSAB. I am looking forward to visiting the SSAB mill as I have not been to their mill in Iowa before.
We will be announcing the location of our next Steel 101 workshop soon. We anticipate we will produce our Steel 101 workshop during January 2016.
As always your business is truly appreciated by all of us at Steel Market Update.
John Packard, Publisher
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I want to give a big shoutout to the good folks at the Fabricators and Manufacturers Association (FMA) for inviting me to their annual conference this week in Clearwater, Fla. I also want to give a special thanks to the FMA for awarding SMU founder John Packard with a lifetime achievement award – on that also gave me a chance to catch up with my old boss in person.
What are some “Black Swans” to watch out for? With the war in Ukraine entering its third year, your mind might understandably move to conflicts overseas. Here is one closer to home to consider: US trade relations with Mexico taking a turn for the worse. I mention that because the Office of the United States Trade Representative (USTR) dropped a (virtual) bombshell earlier this month.
Domestic prices have been sliding since the beginning of the year, and I don’t see any obvious reasons why the slide might stop this week. But let’s put the timing of a bottom aside for a minute. The question among some of you seems to be whether we’ll see another price spike, or at least a “dead-cat bounce,” before the typical summer doldrums kick in.
I’ve had discussions with some of you lately about where and when sheet prices might bottom. Some of you say that hot-rolled (HR) coil prices won’t fall below $800 per short ton (st). Others tell me that bigger buyers aren’t interested unless they can get something that starts with a six. Obviously a lot depends on whether we're talking 50 tons or 50,000 tons. I've even gotten some guff about how the drop in US prices is happening only because we’re talking about it happening.
We’ve all heard a lot about mill “discipline” following a wave of consolidation over the last few years. That discipline is often evident when prices are rising, less so when they are falling. I remember hearing earlier this year that mills weren’t going to let hot-rolled (HR) coil prices fall below $1,000 per short ton (st). Then not below $900/st. Now, some of you tell me that HR prices in the mid/high-$800s are the “1-800 price” – widely available to regular spot buyers. So what comes next, and will mills “hold the line” in the $800s?