Final Thoughts
Final Thoughts
Written by John Packard
October 9, 2015
Does the U.S. Steel purchase of the former Stelco facility (Hamilton and Lake Erie Works) rank up there with the Severstal and later RG Steel purchase of the former Sparrows Point, Wheeling-Pittsburgh and Warren facilities? I remember Saikat Day, who was the CEO of Severstal NA at the time, when speaking to our 2014 Steel Summit Conference in Atlanta talking about how the billions of dollars lost would never be made up by the parent company. Severstal sold off their remaining U.S. assets (Dearborn and Columbus) and departed the U.S. market.
Without a sales force I can’t imagine the Hamilton and Lake Erie Works surviving the winter.
I will write more about the results of this past week’s flat rolled market analysis (survey) as we generated some dynamic information. The information is already online and available to our Premium level members, those on a trial and those who answered the questionnaire. The results can be found under the Analysis tab on our website. We have a sample available for those who might be curious as to what kind of information is contained in the Power Point.
I would like to recommend our Premium level product to those of you who are Executive level subscribers. We can arrange a trial time period or, like our Executive product Premium comes with a warranty for the first year. If you have questions please feel free to contact me and I will do my best to answer them. I can be reached at: John@SteelMarketUpdate.com or by phone: 800-432-3475.
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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?