Final Thoughts
Final Thoughts
Written by John Packard
October 19, 2015
A reminder, if you received an email invitation to participate in our flat rolled market analysis please click on the link contained in the message. The questionnaire won’t take more than a few minutes to complete and at the end of the week we will have a Power Point presentation for all of those who participated in this week’s questionnaire.
License data continues to disappoint as trending toward numbers greater than 3.0 million tons for October. The good news from my office today is I at least spoke with a couple of companies who normally buy foreign steel and they are reporting they have little to no foreign steel on order at this time.
We continue to work diligently on our program for the upcoming Leadership Conference which will be held in March (8-9) at PGA National Resort & Spa the week after the hotel hosts the Honda Golf Classic. We are working with trade attorney Lewis Leibowitz to do a segment on the antidumping and countervailing duty trade laws, what changes may come out of the new trade language passed by the U.S. Congress earlier this summer as well as the status of each of the trade cases and what manufacturing companies and service centers need to be doing to protect their businesses in the future. We will have more details about the Trade segment of our program as well as other segments over the coming weeks. Right now you can set aside those dates…
Registration is open for our next Steel 101 workshop which will be held in Starkville, Mississippi on January 19-20, 2016 and will include a tour of the SDI Columbus steel mill. We are working with a brand new Marriott hotel (not even open yet) and we hope we can get all of the hotel arrangements confirmed by a live human being soon (we will add them to the website at that point in time).
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?