Final Thoughts
Final Thoughts
Written by John Packard
June 19, 2017
I have a 4 a.m. wake-up call as Diana, Brett and I head for California to conduct our next Steel 101 workshop. We have a great class and we are looking forward to meeting new people, working with California Steel again and trying to stay cool as temps are suppose to be above 90 degrees (but it’s a dry heat…122 degrees in Palm Springs).
Alison will be in our office in Florida and can be reached at 772-932-7538 or you can send her an email at Alison@SteelMarketUpdate.com. Diana, Brett and I will be checking our emails and will be in constant contact from the air as long as Delta has working WiFi on the plane to LAX.
The Democrats are starting to raise concerns about the lack of transparency with the Section 232 process. There were two updates with Congress cancelled last week and, at the moment, the only one on the books is a June 29 briefing that is the President’s self-imposed deadline to make the announcement.
More fun times to come on this subject, and it may not go the way the domestic mills think it was suppose to go. There is growing resistance both domestic and foreign…
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?