Final Thoughts
Final Thoughts
Written by John Packard
May 9, 2016
My final thoughts are going to be short this evening. The word that keep going through my head today as I spoke with buyers and sellers of steel was “worry.” The number of people who worry about what is going to happen next seems to be growing by leap years on a daily basis. I remember quoting a service center who participates in the HARDI conference calls in the last HARDI article I wrote. “We are one mill accident away from chaos” is how I remembered it (off the top of my head, so it may have been slightly different but I think you get the idea). Since then we have had two incidents and we still are not quite sure what the final impact will be with CSN or North Star BlueScope. Worry…
The financial community is worried about what is happening in China. Extremely worried.
Steel buyers are worried about billet offers to Turkey – how will that affect scrap prices here in the United States? Worry.
Steel buyers are worried about buying too much high priced inventory. No one wants to be anywhere near upside down when the market does make its turn. Worry.
There are concerns (worries) about margins and margin compression. After all how easy is it to tell your best customer that the price he bought at last week is now $100 per ton higher and you can only give him 75 percent of what he wants? Worry.
I think there will be plenty to discuss during our 6th Steel Summit Conference in Atlanta at the end of August. We hope we will be able to dissipate some of the worries and replace them with good information, excellent networking opportunities and new challenges to look forward to. You can find more information about the conference on our website: www.SteelMarketUpdate.com.
I will be in Chicago beginning tomorrow evening and will be attending the Boy Scout Dinner on Thursday evening. I hope to see you there.
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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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.
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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
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Final Thoughts
We're about to hit 50% Section 232 steel tariffs. What could happen?