SMU Price Momentum Indicator Adjusted to Higher

A domestic mill source advised SMU this morning that they were waiting for scrap to settle before the next price move is made. “Lead times are in mid to late January. Waiting for scrap to settle formally before making another push. Global is heating up again with cost-push coming back, and inventories in the U.S. are drawing down in our core markets. I am quite bullish about seeing major price increases in Q1.”

There will be fewer tons of foreign steel entering the United States over the next few months. We saw the reduction during the month of November as license data is suggesting imports of about 2.6 million tons. We expect imports will remain low due to higher international prices, duties associated with antidumping/countervailing duties and now the positive ruling on circumvention by Vietnam and China.

There is another trade issue that we cannot ignore. The Section 232 investigation is still out there and the deadline of mid-January is fast approaching. SMU believes there will be some cost associated with importing foreign steel that doesn’t exist now. That cost could come in the form of a tariff or some sort of quota (or both).

SMU is of the opinion that if there are any “Gray Swan” events, they would most likely be favorable to higher steel prices.