Final Thoughts
Final Thoughts
Written by John Packard
May 1, 2017
The domestic steel mills did not cancel scrap orders for April delivery that had not yet arrived. This is a sign that the steel mills believe prices will be sideways to slightly higher for May delivery than what they negotiated for April. All is quiet as the steel mills and their scrap suppliers jockey for position. Last night we were advised to watch prime grades of scrap in Canada and the Ohio/Detroit markets due to the outage at the EAF at ArcelorMittal Dofasco and the planned maintenance on the “B2” furnace at USS Great Lakes. When I discussed this with a couple of my scrap sources in the area they told me these were “non-issues” as the EAF will be back in service within the next couple of days and the Delta mill was a bigger factor for scrap prices in the Detroit market. We do expect to have some information on May ferrous scrap prices on Thursday and we will advise at that time.
The U.S. Department of Commerce initiated a dumping suit against steel tool boxes from China and Vietnam. Companies who manufacturer products overseas need to be aware that it only takes one company (or the DOC itself to “self-initiate”) to file a dumping suit to create all kinds of problems for your company. In the case of the tool boxes from China it was Waterloo Industries in Missouri.
I have confirmed with trade attorney Lewis Leibowitz and Daniel Pearson, Fellow at Cato Institute and former ITC Chairman, that they will be conducting a discussion about the various ways trade cases can be initiated and how each one works. Specifically, I have asked them to help our SMU Steel Summit attendees understand Section 232, Section 337, Section 201, Antidumping (AD) and Countervailing Duty (CVD), Circumvention and the concept of “self-initiation” by the U.S. government. This education session will be held as one of the two Pre-Summit Conference programs we will have on Monday, August 28th at the Atlanta Airport Marriott Gateway Hotel (our conference host hotel) located next to the Georgia International Convention Center (www.gicc.com). This program will begin at 2 PM ET at the Marriott Hotel. Registration (picking up your credentials) will begin at 1 PM in the lobby of the Marriott Hotel. Leibowitz and Pearson will also be part of a “free and fair trade” panel at 3 PM on Tuesday at the Convention Center along with Philip Bell, President of the Steel Manufacturers Association and one other speaker representing the manufacturing community.
As I mentioned the other day our room block at the Marriott Gateway Hotel is filling fast. We had 80 rooms left as of last week. We have plenty of rooms at the SpringHill Suites hotel across the street. If you are “budget minded” it is best to book now before all of the special rate rooms are taken…
We still have plenty of seats left for our next Steel 101: Introduction to Steel Making & Market Fundamentals workshop in Ontario, California. Details are on our website or you can contact me in my office: 800-432-3475 or 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?