Final Thoughts

Final Thoughts

Written by John Packard


As I was sitting at my desk this evening (around 8 PM ET) thinking about what I was going to write about in my Final Thoughts article, I flipped over to my second computer screen to look at the U.S. Department of Commerce site dealing with foreign steel imports. The site is normally updated every Tuesday at 5 PM. This week was not a normal week as they did not update the site on Tuesday and we have been inquiring with them all day today to see when they were going to catch up. We hadn’t heard from them and the site was not updated by the time Brett left our offices at 5:30 PM.

So, now it’s 8 PM and viola! the site has been updated. Only problem is I rely on my right hand man (Brett) to assist me in crunching the numbers and burying me with both data and visuals to use in the newsletter. So, I have to wing it myself.

The first thing I notice is today is the 15th of the month, so we are essentially half way through the month, and the total steel license number is 1,935.244 metric tons (US DOC uses metric tons for receiving weights and then we convert it to net tons for our readers). This equates to 2,133,238 net tons which is quite a large number for only being half way through the month… If license requests continue at this rate October would be the highest import month this year at over 4 million net tons. My opinion is we will not see the month end up anywhere near that level but, who knows? crazier things have happened in the steel industry.

The next thing I did was to look for anything unusual and the first thing that caught my eye was the amount of semi-finished (mostly slabs) that was already being requested for the month = 778,555 net tons. If there is not one more pound of licenses requested and all 778,555 tons were to arrive this month, October would be the highest month for semi-finished since January of this year when 808,327 net tons arrived into the U.S. ports to help supply the domestic steel mills.

I spend a few minutes looking at the items that are affected by trade suits:

Hot Rolled: There are 215,748 net tons of licenses requests to date with Korea having the lion’s share with almost 100,000 net tons of the total. Other large suppliers are Brazil, Canada and the Netherlands.

Cold Rolled: Only 83,515 net tons of licenses requested. This is much less than what we had seen over the past few months and the biggest reason may be that China has only requested 4,174 net tons. The biggest culprit is Russia with 21,263 net tons or about 25 percent of the total number of tons requested to date.

Galvanized: Has 108,868 net tons of license requests which, if the trend continued, would put them below 220,000 net tons and we haven’t been at that level for quite awhile. Taiwan is the biggest supplier at 31,963 net tons.

Galvalume (other Metallic): AZ just keeps on plugging along and so far in October there are 60,483 net tons of import license requests. Taiwan has already exceeded the license total they had for September (27,612 net tons vs. September 23,705 net tons). Korea continues to be a big player (one of their traders told me last week that they were continuing to ship as they do not feel the dumping suits will “stick” and impact their business) and they have 21,281 net tons of licenses so far this month. Between these two countries, which are both part of the antidumping trade case, they have 48,893 net tons of the 60,483 total licenses requested for the month to date…

We will publish a Premium issue tomorrow afternoon. The issue will contain an analysis of various currencies associated with the steel and scrap industries. We will also have our analysis of the MSCI service center flat rolled inventories and how we did forecasting Apparent Excess/Deficit within the service center segment. I will give you a hint: we did forecast inventories to rise and for the excess to increase. We were right but missed the amount of the increase.

We have selected a date for our next Steel 101: Introduction to Steel Making & Market Fundamentals workshop: it will be held on Tuesday, January 19 and Wednesday, January 20, 2016. The host mill will be Steel Dynamics Columbus, Mississippi. We are looking forward to returning to the Columbus mini-mill which is the largest electric arc furnace flat rolled rolling mill in the United States. We are working with two Marriott hotels in the area and expect to select the final hotel by (I hope) early next week. However, registration is open on our website or through our office (800-432-3475). If you have any questions please do not hesitate to contact us; info@SteelMarketUpdate.com.

As always your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher

 

Latest in Final Thoughts

Final thoughts

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?