Final Thoughts
Final Thoughts
Written by John Packard
February 1, 2017
I debated about just changing our Price Momentum Indicator to Neutral just on hot rolled and cold rolled and leaving galvanized at Higher. The pricing pressure on coated products spot negotiations does not appear to be necessary when looking at the lead times. The question then becomes are the lead times perhaps a bit “padded,” as many customers are advising SMU that their orders are coming in early?
A galvanized focused service center told SMU this afternoon that the spot market was “a mixed bag.” He was concerned that spot prices out of service centers were beginning to drop and the market was much more competitive. He also told us that the spot market for his mix of galvanized products was very slow.
One of the steel mills (conversion mill) told us today that they just closed their order book for February and since their order book is 50 percent contract they are now into the 3rd week of March lead times….
The Steel 101 workshop for Toledo, Ohio is open for registration. The dates are April 11 & 12,2017 and the mill tour will be at the North Star BlueScope steel mill in Delta, Ohio. Registration and information about the workshop can be found on our website: www.SteelMarketUpdate.com. “Overall, a job well done explaining steelmaking and the market fundamentals to a varied audience. Whether you’re eight weeks or eight years in the steel business, there’s something in it for you.” Kari LaHaie, Magic Steel
Registration is also open for our 7th Steel Summit Conference which will be in Atlanta, Georgia on August 28, 29 & 30th at the Georgia International Convention Center. Our host hotel will once again be the Atlanta Airport Marriott Gateway Hotel plus their sister properties located across the street. “Anyone who is involved in the flat rolled business who does not attend this conference is missing out on an opportunity to grow personally as well as returning value to their organization.” Shane Morris, Commodity Manager, Crown Equipment Corporation
More information about the conference can be found on our website: www.SteelMarketUpdate.com
I want to also take a moment to thank our sponsors who have already committed to this year’s conference: Pacesetter, Bank of America, Mill Steel, Heidtman Steel, Alliance Steel, Magic Coil Products, Kenwal Steel, Midwest Materials. We have a limited number of sponsorships left. You can find a brochure on our website or contact us at: info@SteelMarketUpdate.com and we can provide one to you and advise what options are still available. We also have a limited number of exhibition booth space available as well. Questions? Call me at 800-432-3475.
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?