Final Thoughts
Final Thoughts
Written by John Packard
May 24, 2017
During the Section 232 hearing at the Department of Commerce yesterday, Wilbur Ross told U.S. Congresswoman Marcy Kaptur (OH) that his report on steel Section 232 will be on the President’s desk by the end of June. This coincides with the prognostication of trade attorney Lewis Leibowitz who felt the President could react by the end of July.
We have placed a number of the speakers testimony in front of the US DOC panel regarding Section 232 on our blog which can be found on our home page: www.SteelMarketUpdate.com. We will continue to post information on our blog as it becomes available.
For those of you who follow Steel Market Update on Twitter @SMUSteel I probably posted 20 tweets as the Section 232 hearing was happening. I try to use our Twitter feed to get the word out quickly on matters of importance to the industry.
We have gotten a commitment from William Gaskin, President Emeritus (just retired a few days ago) Precision Metal Forming Association. The PMA is comprised of 900 fabricators and we welcome Mr. Gaskin as part of our Trade Panel. He will join Philip Bell of the Steel Manufacturers Association, Daniel Pearson of Cato Institute and former ITC chairman and Lewis Leibowitz. The topic of discussion will be what is free and fair trade? You can join us at the SMU Steel Summit Conference at the end of August (28-30) in Atlanta, Georgia. Details can be found by clicking here or going to: www.SteelMarketUpdate.com/Events/Steel-Summit
We have a verbal confirmation from our final Keynote Speaker and we are waiting for the final release by CNN so that we can announce the speaker. I highly recommend that you make return flight arrangements for 5 PM or later so as to not miss our final two segments. The final Keynote Speaker will begin around 1 PM and will end around 2:30 PM. We will finish the conference with a panel of young people who will talk about the challenges and opportunities of attracting young talent to work in the steel and manufacturing industries. We will announce the panelists in the coming days.
We still have a few seats available for the June 22-23, 2017 Steel 101 workshop which will be held in Ontario, California and will include a tour of the California Steel Industries steel mill. Details can be found here or www.SteelMarketUpdate.com/Events/Steel101.
Monday is Memorial Day here in the United States which means Steel Market Update will not be publishing a newsletter on Sunday evening. Our next issue will be on Tuesday, May 30th. Enjoy your time with family and friends. Me, I’m going to hit the beach…
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?