Final Thoughts
Final Thoughts
Written by John Packard
January 3, 2018
We are hearing that ferrous scrap prices will rise by $20 to $30 per gross ton this month. Negotiations continue at most of the mills, but we did learn of one Detroit mill settling yesterday up $20 on primes (busheling/bundles) and up $30 on the other grades. The cold weather, strong exports and low inventory levels at the steel mills are pushing prices higher. We will have more on the scrap market and where things settled in Sunday evening’s issue.
The week has started with a bang as Nucor, U.S. Steel, NLMK USA and AK Steel all have announced $40 per ton price increases, while the West Coast mills of California Steel Industries and USS/POSCO have taken their prices up by $30 per ton. Reaction from steel buyers and actual price offers will be coming to light in the coming days. We heard from a few buyers of spot hot rolled being offered anywhere from $32.50/cwt ($650 per ton) to $35.00/cwt ($700 per ton) depending on the mill and location. It will take one to two weeks before we are able to determine if the increases “stick” (and what does “stick” mean).
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John Packard, Publisher
John Packard
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Final Thoughts
Getting back to the price increases I mentioned at the top of this article, to what extent are they aimed at raising prices and to what extent are they aimed at stopping the bleeding that was happening in the second half of May, before President Trump announced the 50% tariff?
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.