Final Thoughts
Final Thoughts
Written by John Packard
September 29, 2017
I am in Chicago and will be here until Tuesday when I make my way to Fort Wayne, Ind., to conduct one of our Steel 101 workshops. A special thank you to SDI and Paragon Steel for allowing our workshop to tour each of their plants. This workshop has been sold out for a number of weeks.
Our next Steel 101 workshop, which is now open for registrations, will be held Jan. 24-25, 2018, in Mobile, Ala. We will be touring the SSAB Mobile minimill. You can find more information about this workshop on our website.
I am going to take a personal liberty here for a moment. When I first started in the steel business, I worked for a company in Skokie, Ill., called Rolled Steel Corporation. As a junior salesperson, I sat in a large office with about 20 other junior and senior salespeople. Another junior salesperson named Mike Dunn sat behind me. It was from Mike I learned what a “nudge” was…. Mike passed away on Friday evening with his family by his side. My thoughts and prayers are with Mike, his wife Beth and his children and grandchildren.
I will be working with the service centers who are involved with our inventory “flash” report early this week and with the larger group of distributors who are working with us on our new Service Center Inventories Index (flat rolled). We hope to get our index published on or about the 10th of each month.
On Monday morning at 8 AM, we will begin canvassing manufacturers, service centers, steel mills, trading companies and toll processors about various trends (pricing, demand, service center spot, imports, etc.). If you receive an invitation, please take a few moments to answer the first question (shown in the invite), which will then take you to the rest of the questionnaire.
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?