Final Thoughts
Final Thoughts
Written by John Packard
January 24, 2018
The wheels are moving and things are happening that are going to affect the momentum behind this market.
First, there are new price increase announcements being made, first out of California and now by ArcelorMittal USA, which has put new base prices into the market. Second, Big River Steel put their customers on allocation for the month of March. Steel Market Update heard from multiple BRS customers who advised us that BRS was telling contract customers they could not order more than the contract “minimum” for the month of March. Other customers also told us that their tonnage was being restricted in March so the mill could catch up and deliver late orders. I expect there will be more mill announcements in the coming days reacting to what ArcelorMittal put out there this evening. AM told their customers the new minimum base prices would be: $750 per ton on hot rolled and $930 per ton on cold rolled and coated products.
And we are still waiting for the president’s decision on Section 232…
We had an excellent Steel 101 workshop in Mobile over the past two days. I want to thank SSAB who went out of their way to provide an exceptional experience for our attendees. The mill has to change out one of the molds in their caster, which impacted their EAF. Even so, the mill went out of their way to charge their two EAF’s for our group. Thank you again SSAB.
Our next Steel 101 workshop will be in Merrillville, Ind., and we will tour the NLMK USA Portage steel mill. The dates are March 28-29, 2018. You can find more details on our website.
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?