Today is Feb. 11 and it has been one month since Secretary of Commerce Wilbur Ross sent his recommendation regarding Section 232 to the office of President Trump. Since then, there has been much speculation but nothing of substance as the industry waits for the president to remove the uncertainty.
Over the past week, I have been reaching out to steel traders to see what their thoughts are regarding Section 232 and other subjects. One trader told me, “It is impossible to run a business on no facts at all… We are not stopping but we are trading with our eyes wide open.” This trader told us that they have put language in their contracts that protects them should the government impose new duties. “You can go broke by doing nothing.”
So, as of Feb. 11, there are 59 days left before a decision must be made.
Speaking of days left – as of today there are 44 days left before our next Steel 101 workshop, which will be held in Merrillville, Ind., just outside of Chicago. We have a few spots left, and you can get more information on our website.
There are also 196 days before the beginning of our 8th SMU Steel Summit Conference. Registration is available on our website.
I will be in my office all week this week. Next week, I will be at the Port of Tampa Steel Conference. I do recommend the conference, which this year will have a few of our past Steel Summit speakers (and at least one current one) presenting. I look forward to seeing you there.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
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Latest in Final Thoughts
Domestic prices have been sliding since the beginning of the year, and I don’t see any obvious reasons why the slide might stop this week. But let’s put the timing of a bottom aside for a minute. The question among some of you seems to be whether we’ll see another price spike, or at least a “dead-cat bounce,” before the typical summer doldrums kick in.
I’ve had discussions with some of you lately about where and when sheet prices might bottom. Some of you say that hot-rolled (HR) coil prices won’t fall below $800 per short ton (st). Others tell me that bigger buyers aren’t interested unless they can get something that starts with a six. Obviously a lot depends on whether we're talking 50 tons or 50,000 tons. I've even gotten some guff about how the drop in US prices is happening only because we’re talking about it happening.
We’ve all heard a lot about mill “discipline” following a wave of consolidation over the last few years. That discipline is often evident when prices are rising, less so when they are falling. I remember hearing earlier this year that mills weren’t going to let hot-rolled (HR) coil prices fall below $1,000 per short ton (st). Then not below $900/st. Now, some of you tell me that HR prices in the mid/high-$800s are the “1-800 price” – widely available to regular spot buyers. So what comes next, and will mills “hold the line” in the $800s?
Everyone knows the old saying that “a picture is worth a thousand words.” Just because it’s a cliché doesn’t mean that it’s wrong. A lot of inked has been spilled trying to figure out why prices are falling now. I thought it might be as simple as this: Market dynamics in the fourth quarter (UAW strike, companies buying ahead of an anticipated post-strike price spike, etc.) pulled forward restocking activity that typically happens in the first quarter.
What a difference a month makes. There are a few full bulls left in the room, but their numbers are dwindling. We’ll release results of our full steel market survey tomorrow afternoon. I took a sneak peak at the data on Thursday. And more people than I expected think that US hot-rolled (HR) coil prices will be in the $700s per short ton (st) two months from now. Vanishingly few think prices will be above $1,000/st in mid-April.