Final Thoughts
Final Thoughts
Written by John Packard
April 13, 2016
I will be doing an article in Sunday evening’s newsletter about the AISI capacity utilization numbers. The AISI produces their “estimate” of steel production and the percentage of capacity utilization based on 50 percent (or fewer) of the mills reporting production data. I have considered not publishing the data at all because, in my opinion, the numbers are more fiction than fact. Especially when considering sheet or flat rolled products which today are much closer to 95 percent than the 72 percent reported by AISI. One reason why their number is so off is due to long products being included in the total calculation. More on this subject on Sunday evening.
Nucor and ArcelorMittal have come out with spot pricing to their customers with hot rolled at $26.00/cwt. I am hearing that NLMK USA is also at $26.00/cwt ($520 per ton) while SDI and North Star Bluescope are at $25.50/cwt ($510 per ton).
There is not much foreign hot rolled being offered into the U.S. market. When there is an offer the numbers are very close to domestic offers so the purchasing advantage to foreign is much less unless your company is a believer that prices will be much higher in August than they are today.
We understand US Steel has been buying hot rolled from SDI and possibly Nucor and shipping it into Granite City. With their books being essentially full, with scrap prices rising (which affects purchases from other mill suppliers) and with foreign appearing to be less of an issue in the coming months, my opinion is USS may consider bringing back one of their blast furnaces at Granite City. We will need to watch this carefully in the coming days and weeks. I expect we should know something by the time USS releases their earnings later this month.
For those interested in sending someone to our next Steel 101 workshop in Sylvania, OH (just outside of Toledo) we only have a few spots left before the workshop will need to be closed. You can find more information on our website and you can register there or by contacting our office: 800-432-3475.
Our next Steel 101 workshop will be in early November in Memphis, Tennessee and will include a special once in a lifetime tour of a brand new steel mill – Big River Steel. We will most likely expand this workshop to 2.5 days (from 2 days) in order to get as much information about the mill as possible to our attendees. We have already started a reservation list of those interested in sending employees. More details to come.
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
We just wrapped another Steel 101 Workshop, where you take what you learned in the classroom into the steel mill.
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.