Final Thoughts
Final Thoughts
Written by John Packard
March 24, 2017
“Fair and Free Trade” is something that those of us who have been in the steel industry since 2000 have heard over and over again from the domestic steel industry. What exactly is “fair” trade and who should decide? The steel mills have done an exceptional job of determining the talking points through lobbying efforts and the use of the U.S. trade laws. Manufacturers, on the other hand, have generally been mute on the subject. Right now, Steel Market Update is attempting to get a manufacturing industry association representative to speak at our conference. We are finding associations like the National Association of Manufacturing (NAM) aren’t able to find someone within their group to be part of a panel at this year’s SMU Steel Summit Conference. We are now working with the U.S. Chamber of Commerce and we hope their schedules are able to accommodate our conference. They would join Philip Bell, President of the Steel Manufacturing Association (members are the EAF steel mills), Dan Pearson, Fellow at the Cato Institute and former chairman of the International Trade Commission and trade attorney Lewis Leibowitz who is well know to past Steel Summit attendees for his support of free trade.
I struggle with the topic of free and fair trade as I personally have been on both sides of the street having represented a domestic steel mill as well as a couple of international trading companies. The Chinese seemingly lack of understanding of the laws of supply and demand have taken the conversation of what is fair to new heights. To me, it was obvious 10 years ago that the Chinese were on a path of self-destruct for the steel industry by building too many steel mills; growth and employment at the expense of the health and well-being on their citizens and exporting unemployment to the United States and elsewhere.
The U.S. hasn’t been totally silent or innocent for that matter. How many hundreds of millions of dollars in subsidies were given to the domestic steel mills over the past ten years? ThyssenKrupp Calvert (now ArcelorMittal Nippon Sumitomo Calvert), Big River Steel and others benefited from government subsidies in order to get the mills built.
Don’t get me wrong, I am a big supporter for a strong, independent steel industry in the United States just as I am a supporter of a strong, vibrant manufacturing industry, but sometimes these two don’t seem to be that supportive of one another…
I will be traveling to Las Vegas on Monday afternoon as I am speaking to the Steel Framing Industry Association (SFIA) on Tuesday and will return to my office on Thursday morning. I can be reached by email: John@SteelMarketUpdate.com or you can speak to Diana (772-932-7538) or Brett (706-216-2140) in their offices during my absence.
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
What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.
Final thoughts
Last week we wrote about a brief lull in price movement, labeling it a period of wait and see. It did, in fact, turn out to be pretty brief. This week... things are little bit different. Perhaps right now we are more in a period of "hope and pray" or "Here we go, hold on to your hats."
Final thoughts
Unless you've been under a rock, you know by know that Nucor's published HR price for this week is $760 per short ton, down $65/st from the company’s $825/st a week ago. I could use more colorful words. But I think it’s safe to say that most of the market was not expecting this. For starters, US sheet mills never announce price decreases. (OK, not never. It has come to my attention that Severstal North America rescinded a price increase back on Feb. 14, 2012. And it caused quite the ruckus.)
Final thoughts
Is it just me, or does it seem like the summer doldrums might have arrived a little early? I could be wrong there. It’s possible we could see a jump in prices should buyers need to step back into the market to restock. I’ll be curious to see what service center inventories are when we update those figures on May 15. In the meantime, just about everyone we survey thinks HR prices have peaked or soon will. (See slide 17 in the April 26 survey.) Lead times have flattened out. And some of you tell me that you’re starting to see signs of them pulling back. (We’ll know more when we update our lead time data on Thursday.)
Final thoughts
Everybody has a plan… until they’ve dealt with volatility in the HRC market. While Mike Tyson’s original quote was about getting punched in the mouth, it’s unlikely the ex-champ has gone many pricing rounds with hot-rolled coil.