Final Thoughts
Final Thoughts
Written by John Packard
June 29, 2016
I happen to be traveling this week and weekend. I am in Maine where in my youth my family used to vacation. Maine is a beautiful state to visit if you have not been here.
I want to take a moment to wish all of my U.S.A. readers a safe and happy 4th of July weekend. We will all have a lot to reflect on with this being an election year and, well the “interesting” candidates we get to choose a president from this year.
To my customers in the rest of the world who are fretting about our election I remind you of the words attributed to Winston Churchill of England (although my research is suggesting that he never actually made this statement), “Winston Churchill once famously observed that Americans will always do the right thing, only after they have tried everything else.”
As always your business is truly appreciated by all of us here at Steel Market Update. We will publish our next issue of SMU on Tuesday, July 5th due to the 4th of July Holiday here in the U.S.A.
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.