Final Thoughts
Final Thoughts
Written by John Packard
January 12, 2018
As expected, Wilbur Ross and the U.S. Department of Commerce submitted the Section 232 report on steel on Thursday evening. The much-anticipated report, originally “due” back in June 2017 (at President Trump’s request), beat the technical timeline by a couple of days. The White House did not release the recommendations reported and does not have to do so until the president makes his decision, which is due within 90 days from the delivery of the report.
Following up closely behind the steel report will be a separate Section 232 investigation report on aluminum. The aluminum report is due in about a week’s time.
The uncertainty surrounding these reports will continue for some time to come based on similar reports that have been held close to the vest on other subjects.
There are many factions working both for and against taking radical action against foreign steel suppliers for national security reasons. We do not know who will be the last person to have President Trump’s ear prior to the announcement being made.
There is an article in tonight’s issue about plate and plate price increases. The article is based on discussions first from one of the plate steel mills questioning a comment that was made (and we found they were correct, the comment should have attributed the production month as February instead of March). We are open to discussing pricing and anything else in our newsletter as it is important that we present as fair an assessment of the market as possible.
If you have questions, comments or suggestions, you can reach me at John@SteelMarketUpdate.com or on my office phone which is 800-432-3475.
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
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.
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.