Final Thoughts
Final Thoughts
Written by John Packard
October 27, 2017
Steel Market Update (SMU) will begin our next flat rolled steel market trends survey at 8 AM ET tomorrow (Monday). If you receive an invitation, please take a few moments to click on the button in the message and fill out our questionnaire. Most people are able to get through the process in less than five minutes. We think this will be an important barometer to see if the price increases are taking hold, what is happening with lead times and mill negotiations, as well as how steel distributors are handling spot sales to their customers. Again, look for the invitation to participate at 8 AM ET.
A second reminder that our Steel 101: Introduction to Steel Making & Market Fundamentals workshop scheduled for Mobile, Ala. on Jan. 24-25, 2018, is sold out. We are creating a waiting list, and we are hopeful we will be able to accommodate a couple of those on the list once we get closer to the workshop dates. The Mobile workshop includes a tour of the SSAB Mobile minimill.
Following Mobile, we will be traveling to Portage, Ind., to tour the NLMK USA minimill. We are working on finalizing the dates of that workshop, which will be in the month of March. After Portage, we anticipate hosting another Steel 101 workshop in May, then we are looking at one during the summer months and finally one in October.
I want to welcome a new addition to the Steel Market Update family. We have added Jill Waldman to our Events team. Jill will be working with Ray Culley and me on next year’s SMU Steel Summit Conference. She will be involved first with coordinating our sponsor and exhibitor efforts. If you would like to communicate with her, she can be reached at Jill@SteelMarketUpdate.com.
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?