Final Thoughts
Final Thoughts
Written by John Packard
August 14, 2017
As was mentioned earlier in tonight’s newsletter, our 2017 SMU Steel Summit Conference will be a sell-out this year and the question really is what day this week will we close registrations? I am both surprised and humbled by the response we have gotten to this year’s event. Our team works very hard to put on an “experience” that is comfortable and highly conducive to having a great learning experience and at the same time being able to network with hundreds of your customers or suppliers. Even better, hundreds of potential customers or suppliers…
Those of you sitting on the fence and not knowing whether to go or not to go to our conference, the clock is ticking…
So far today (Tuesday), three steel mills have announced price increases–all of them at $30 per ton–which essentially covers the $10-$30 per gross ton scrap increases the mills are having to absorb during the month of August from their scrap suppliers. The three mills we are aware of include: Nucor, ArcelorMittal USA and NLMK USA.
SMU’s Price Momentum Indicator remains at Neutral. When the domestic steel mills announce price increases, we automatically go to Neutral as we do not want to go out and signal which way prices will head until we get a clear signal from steel buyers who are actually placing orders. Let’s give it a week or so to work its way into the order books of the steel mills.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
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?