Final Thoughts
Final Thoughts
Written by John Packard
January 22, 2018
We have mentioned this elsewhere in today’s newsletter, but it bears repeating. The recent Section 201 decision by President Trump on residential washers and solar equipment may well be a blueprint for what we might see when the Section 232 decision is made on steel. The formula seems to be pointing toward some form of quota followed by punitive duties of 20 percent or higher in the first year.
The issue is the difference between products like washing machines and steel. It’s relatively easy to regulate washers, where there are a small number of manufacturers to control. With steel, you have countries (like Vietnam) that have many steel mills and then dozens of trading companies offering their steel into the United States. The country is not the importer of record, it’s the trading company here in the United States. How do the various trading companies know how much Vietnamese steel (or if it is by product, how much galvanized) is committed to be imported into the U.S.?
My opinion is you need to look at Jan. 30 as a potential target date. That is the date of the state of the union speech to be delivered by President Trump.
I am with my team of Steel 101 instructors in Mobile, Ala., where we will be conducting our workshop over the next couple of days. The weather is good (low 60s) and we are looking forward to our tour of the SSAB steel mill on Wednesday afternoon.
The next Steel 101 workshop will be outside of Chicago in Merrillville, Ind., on March 28-29. Go to our website for more details.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
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Final thoughts
Cleveland-Cliffs is seeking $750 per short ton (st) for hot-rolled coil. That’s $20/st above where the steelmaker had been. It’s also $30/st above Nucor, which is at $720/st this week. We've seen prices increase incrementally this week. SMU's HR price, for example, stands at $690/st on average, up $5/st from last week. The questions now are whether a number well above $700/st will stick, whether other mills will follow Cliffs, and whether there is enough demand to support higher prices.
Final thoughts
We got a little flack for adjusting our sheet momentum indicators to neutral last week. To be clear, we didn’t adjust them to lower. Part of the reason we moved them to neutral was because there are some unusual cross-currents in the current market. On the news side, you could make a case that there should nowhere to go but up.
Final thoughts
I think all of us know that sometimes courtships go wrong. A misplaced word or deed and soon things can go sideways, and not in the prices sense. Such could be the case with Japanese steelmaker Nippon Steel’s play for U.S. Steel.
Final thoughts
We’re starting to see some impacts of the big trade case filed last week against imports of coated flat-rolled steel from 10 nations. Namely, we’ve heard that a range of traders have stopped offering material from Vietnam. An alleged dumping margin of nearly 160% will do that. Especially amid chatter of critical circumstances.
Final thoughts
The phrase “political football” has been tossed around a lot lately. (Pun probably intended.) For the humble journalists at SMU who thought the week following Steel Summit would prove a quiet one… the news cycle had other ideas