Final Thoughts
Final Thoughts
Written by John Packard
September 8, 2017
The saga continues as we endeavor to escape the wrath of Hurricane Irma. After leaving Hobe Sound, we settled in Gainesville on the campus of the University of Florida. As the hurricane track began to move a little further west, we decided to do the same and headed into the western panhandle of Florida. That is where we are now and where we expect to remain as the storm heads up the west side of Florida. Our hope is the move west will ultimately be good news for our home and office in Hobe Sound on the east coast. We are keeping our fingers crossed. On Monday, we are expecting sustained winds here in the panhandle of 45 miles per hour (just updated to less than 45 miles per hour as the storm weakens while pummeling Naples).
Our thoughts and prayers are with our friends in south and central Florida. We do not want to forget the impact of Hurricane Harvey on Texas. We recommend that you donate to the American Red Cross (www.redcross.org).
We will be watching carefully to see if other domestic steel mills make similar price announcements as that of AK Steel last week (+$30/ton). There are also questions about how the mills are dealing with the higher zinc costs with zinc closing the week at $1.3747 per pound.
It will take a number of days, if not weeks, to determine what damage has been done to transportation and infrastructure that will impact the steel industry. We will continue to work on learning more about the damage and what is being done to lessen the impact on the economy.
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
We just wrapped another Steel 101 Workshop, where you take what you learned in the classroom into the steel mill.
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.