Final Thoughts
Final Thoughts
Written by John Packard
October 5, 2016
Our corporate office building and my home are in the path of Hurricane Matthew. We have evacuated and are in Bradenton, Florida for the next couple of days with hopes that our office, home and neighborhood will still be there when we return over the weekend. Our thoughts and prayers are with those who decided to remain behind which includes two of my neighbors who are disabled and need special equipment and one of our employees.
The issue that worries me is the storm surge which in our area of Florida could be as high as six feet. To make matters worse the storm is hitting at high tide. Our office is located on the second floor of an older office building that did not protect their windows. Our office faces east (towards the ocean).
In the coming days there will be much written about the damage and for those in the steel industry there will be business to gain from the damage. Look for roofing, metal building panels, air conditioners, generators, HVAC, studs, transformers, water heaters, appliances and autos as well as storm shutters that are damaged or destroyed, etc.
We continue to work throughout the day and it has been helpful that we have been conducting one of our flat rolled steel market trends surveys which concluded earlier this afternoon. Our Premium customers will receive both a newsletter and a link to this week’s survey results by tomorrow afternoon.
If you would like to learn more about becoming a Premium level subscriber please contact either Brett Linton (Brett@SteelMarketUpdate.com ) or myself (John@SteelMarketUpdate.com) .
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
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.
Final Thoughts
We're about to hit 50% Section 232 steel tariffs. What could happen?