Final Thoughts
Final Thoughts
Written by John Packard
July 6, 2016
An executive with one of the larger scrap companies told us that trading finally got under way in the Southeast over the past 24 hours. We were told, “Scrap trading got underway in the Southeastern markets late yesterday and today. While demand remained intact for the most part, bearish sentiment seems to be on the increase. Additional supplies from the East Coast exporters surfaced in the region once again, adding supply and pressuring prices for obsolete grades. There seems to be a growing sense that domestic steel prices may be fading, potentially shortening lead times and diminishing domestic scrap demand. Softening pig iron, DRI, and HBI prices into NOLA is also expected to keep prime prices in check heading into August.”
This same executive pointed out that the weakness is in the area of long products which use obsolete grades of scrap. The sheet mills, which use prime grades of scrap, have been running “full out” and have helped keep prime grades of scrap from falling over the past couple of months.
We will have more information on scrap trading in Sunday evening’s issue of SMU.
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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.
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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
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Final Thoughts
We're about to hit 50% Section 232 steel tariffs. What could happen?