Final Thoughts
Final Thoughts
Written by John Packard
August 23, 2017
I am now in Atlanta and the workload and my focus, and that of Ray Culley, Brett Linton and Diana, are all on organizing every minute of the SMU Steel Market Update program, which begins at 2 PM ET on Monday. There are always a few hiccups along the way… something to make your day a little more interesting than what you really wanted.
Most of our speakers are waiting until the last minute to provide us their presentations. This is a good news/bad news scenario for us. We have to go through every slide and marry each presentation with the agenda. For those attending, it appears every speaker is working diligently to provide timely information and opinions on many subjects impacting the domestic steel industry.
If you are attending, we have sent you a number of reminders, and in each reminder is our recommendation that you need to download our App. If you need help, have not received instructions or have questions, please contact Brett@SteelMarketUpdate.com or 706-216-2140.
The conference is SOLD OUT! We made a decision to not take all of the tables out of the room in order to squeeze more chairs into the room (and only have rows of chairs, which I personally do not like – people like tables to take notes, use their laptops or smart phones). Every seat has been sold, and we need to figure out how to fit some of the last minute procrastinators into the room.
One decision we need to make as a company, with the help of our attendees, is whether to begin limiting the number of people who can attend or expand to open it up to as many as possible. I don’t know the answer to this question as it is a new one; this is the first year we have grown by more than 100 registrants. After the conference has concluded, I will be asking the attending for their opinions.
I thought the letter sent by a large majority (but not all) of the steel mills to President Trump in support of Section 232 was an interesting move for what appears to be a stalled process. I don’t know if it will help, but it may bring the subject back up and present a “win?” for the president. We believe there has been a surge of opposition against a move to block imports and/or prevent competition in the U.S. market. This is definitely a topic that will be discussed during our conference – both during the conference and in the side conversations among the attendees.
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?