Final Thoughts
Final Thoughts
Written by John Packard
June 12, 2017
There are a lot of moving pieces to this market. Government intervention into the natural flow of business is/will be impacting trade, steel prices and possibly where products get manufactured in the future. It is both a scary time and an exciting time to be in the steel business. For me, I am glad I get to view it from the outside instead of being an active participant trying to make my way on a day-to-day basis.
I expect the Section 232 recommendations to be made within the next week to 10 days. It is anybodies guess how quickly the President will react. My gut tells me he would rather change the national dialogue away from Russia and onto something he promised on the campaign trail.
A reminder that Tim Triplett and I will be in New York City on Monday, June 26 as well as Tuesday, June 27th as we meet with members of the steel and financial communities. If you are going to be in the city during this time period and would like to chat with us please contact me at John@SteelMarketUpdate.com – we would like to spend some quality time with you.
OK, for those attending, or thinking about attending, our 2017 SMU Steel Summit Conference – the number of blocked rooms is dwindling. As of earlier this afternoon we had 25 rooms left at the Renaissance Gateway Hotel and you can click on this link to make a reservation at that hotel ($159/night). Late today we made arrangements to block another 20 rooms at the SpringHill Suites Hotel at $169 per night. That room block should be available by tomorrow morning. The Marriott Gateway Hotel (host hotel) room block is sold out and the hotel has only a few rooms left at whatever the rack rate is at this time. The Marriott provided a phone number that you can use to ask for group reservations for the Steel Market Update group. That number is 800-468-3571 or 470-306-0100.
I expect there will be rooms available for all who want to attend but, those who wait will probably pay $239 per night or more.
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?