Final Thoughts

Final Thoughts
Written by John Packard
December 1, 2017
I am sitting in the airport in Fort Lauderdale waiting on my flight to Las Vegas. I am on my way to attend the HARDI annual conference. If you are planning on and would like to meet with me during the conference, you can email or text me.
My email address is John@SteelMarketUpdate.com and my phone number is 770-596-6268. I am speaking at the steel committee meeting on Tuesday at 10 AM.
We are including an article in tonight’s newsletter about our SMU Key Market Indicators, which is one of the proprietary products associated with our Premium level membership. If you would like to learn more about Premium level membership and services, please contact us at info@SteelMarketUpdate.com.
A note about our Christmas and New Year’s schedule. Our last issue for the 2017 calendar year will be Thursday, Dec. 21. We will not publish any newsletters from Sunday, Dec. 24, through New Year’s Day. Our first issue for calendar year 2018 will be Tuesday, Jan. 2.
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?