Final Thoughts

Final Thoughts
Written by John Packard
August 18, 2017
Tomorrow is the full eclipse of the sun in many areas of the country. Where I live in southern Florida, the sun will be 81 percent covered. About four hours drive north of here will be in the high 90 percent range. If you are lucky enough to be in an area where a total eclipse can been seen, please be careful to wear the special glasses being used to look at the sun. I believe the eclipse starts in the West (Oregon) and heads east reaching the Atlantic around 2:50 PM ET. Enjoy an event that won’t be back in the U.S. until 2024.
As I mentioned in my final thoughts last week, our SMU Steel Summit Conference is taking a good piece of my attention right now as we put the finishing touches on this year’s program. Every single conference has been different than the one before. We provide different panels and ways at looking at subjects and we adjust to what we think are the important keys to understanding not only what is happening now but, more importantly, what may happen in the future (and why). A number of our panels are interacting with our team and myself right now as we zero in on what we will discuss during my one-on-one discussions.
We are also working on the interactive portion of our program, which is where our attendees can respond as a group and advise everyone what they think about certain topics. The best example of that is our conference, when polled, voted by two to one in favor of Donald Trump for president. We should not have been surprised in November when he won the election. We had a couple of forward-looking questions from last year that we will review and update with this year’s attendees. We will add a question that will be used in our final panel of the conference and we will add a couple of new questions.
Diana and I will be leaving Florida on Wednesday as we travel with all of our equipment to Atlanta. The bulk of our team will come in over the weekend with a few joining us on Monday morning.
A word to those attending – we have literally sold every single seat in the house and now we have a waiting list. If you thought last year was a big crowd…
We don’t expect to miss a beat when it comes to our publication schedule. The only change will be delaying our steel index until Thursday rather than Tuesday.
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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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.