Final Thoughts
Final Thoughts
Written by John Packard
February 20, 2017
Galvanized steel buyers need to remain aware of the movement in zinc pricing. With the strike at the zinc-processing facility in Canada there is a possibility that zinc supplies could tighten here in the United States. Zinc prices have been trading on the LME in the $1.30-$1.35 per pound over the past week. At the beginning of January zinc was trading for $1.22 per pound. if the higher zinc prices continue (remember, the steel mills pay an additional $0.065-$0.08 per pound premium for the metal) then galvanized steel buyers should expect new higher coating extras for 2nd Quarter 2017.
I was actually surprised the only mills announcing price increases so far this week were Nucor, NLMK USA, USS/POSCO and CSN. But, when you actually investigate where mills are in their negotiations with customers, some had not slipped as much as others and the need to announce prices they are already collecting shouldn’t be necessary. The majority of steel buyers were putting the target base prices as being $31.00/cwt-$32.00/cwt on hot rolled and $42.00/cwt-$43.00/cwt on cold rolled and coated. Most of the service centers I spoke with today think the mills will be able to get back on track – especially if scrap goes up as many have been reporting over the past week or two.
We confirmed two more speakers today for our 7th SMU Steel Summit Conference (conference dates are August 28, 29 & 30, 2017 in Atlanta, GA). We are not making announcements as they happen as I prefer to complete a panel or segment before we go out and discuss what we are trying to accomplish. We try to bring in a taste of the “best” from past conferences and add in something new and different. Our goal is not to highlight steel mills but to rather discuss the steel industry. The goal is to look at the industry from various perspectives. I have already mentioned we will have a manufacturing panel for the first time. The panel will consist of three CEO’s of companies that are exposed to multiple market segments. This segment comes due to a suggestion from one of last year’s attendees and I think it will be interesting and enlightening to every attendee.
I know we have two of the best and most entertaining economists in Alan Beaulieu of ITR Economics and Chris Kuehl of Armada Corporate Intelligence.
SMU Steel Summit Conference is now 187 days away and we are way ahead of last year’s registration pace. You can register online at www.SteelMarketUpdate.com/events/steel-summit or you can contact our offices at: info@SteelMarketUpdate.com or by phone: 772-932-7538 or 706-216-2140.
Please tell your friends in the industry that the best steel conference in North America is held in Atlanta on August 28, 29 & 30th…
As always, your business is truly appreciated by all of us 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?