Final Thoughts
Final Thoughts
Written by John Packard
August 1, 2016
Scrap trading has been slow to develop in all but the Detroit area mills. The domestic steel mills are trying to reduce the spread between shredded scrap and prime grades of scrap (busheling and bundles) which in some cases has expanded to $70 per gross ton. Scrap guru Michael Marley reported this afternoon that the domestic mills are trying to shave $30 per ton off the spread. However, prices did settle in Detroit where prime grades were down $10 per gross ton while there was no change in obsolete grades.
Scrap is important as steel buyers watch the changes and use them as a hint as to what direction steel prices should go. If the mills get reductions of $20 per gross ton or more, look for buyers to demand reductions in their base prices. A service center executive told us that one of his mill sources was positioning him for a sideways move on scrap in August. However, we were told if there is a reduction in scrap their company would be asking for relief.
During my conversations with buyers today I heard a number of times concerns about the spread between hot rolled and cold rolled and coated pricing. One of the domestic mills we spoke with reported that they were seeing more competition especially on cold rolled. The mill reported cold rolled prices from foreign sources around $600 per ton ($30.00/cwt) at a time when domestic base prices are averaging $41.00/cwt.
A couple service centers wondered if the Europeans would begin taking notice and begin shipping more cold rolled and coated to the U.S. because of these attractive spreads in the numbers. In looking at the cold rolled license data report which was updated this evening the following European countries are exporting 5,000 net tons or more of CR to the United States during the month of July: Sweden, Turkey and Germany. Also of note is the 5,500 tons of CR exported by Hong Kong during the month of June… Vietnam was the largest CR exporter during July with 36,000 tons of license requests. Vietnam was followed by Canada and Mexico.
We continue to take registrations for our 6th Steel Summit Conference and we are closing in on 400 attendees. I believe our conference will be the largest gathering of flat rolled people in North America. If you would like to add your name to the list you can do so on our website: www.SteelMarketUpdate.com or by contacting our office: 800-432-3475. There are only 26 days to go…
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
Final thoughts
We got a little flack for adjusting our sheet momentum indicators to neutral last week. To be clear, we didn’t adjust them to lower. Part of the reason we moved them to neutral was because there are some unusual cross-currents in the current market. On the news side, you could make a case that there should nowhere to go but up.
Final thoughts
I think all of us know that sometimes courtships go wrong. A misplaced word or deed and soon things can go sideways, and not in the prices sense. Such could be the case with Japanese steelmaker Nippon Steel’s play for U.S. Steel.
Final thoughts
We’re starting to see some impacts of the big trade case filed last week against imports of coated flat-rolled steel from 10 nations. Namely, we’ve heard that a range of traders have stopped offering material from Vietnam. An alleged dumping margin of nearly 160% will do that. Especially amid chatter of critical circumstances.
Final thoughts
The phrase “political football” has been tossed around a lot lately. (Pun probably intended.) For the humble journalists at SMU who thought the week following Steel Summit would prove a quiet one… the news cycle had other ideas
Final thoughts
Sheet prices didn’t roar back after Labor Day. But steel market news sure came out of the gate strong (or maybe chaotically is the better way to put it). First, the nearly $15-billion proposed sale of U.S. Steel to Nippon Steel exploded into the news. And when I say exploded, I mean that all sides seem to be escalating things now.