As much as the mills are gloating about President Trump’s decision to lay a 25 percent tariff on foreign steel, remember one thing – not one of them asked for it. When it was handed to them, they took it. They did not fight to protect those products that they don’t like to make (or can’t make according to the customer base).
I found interesting one of the responses I got today from a former OEM steel buyer now with a service center, as I am personally not a big supporter of political intervention – especially if the so-called harmed parties did not request it. (Although there are some absolutely bad hombres sending in pipe and some other products at foolish prices.) Here is what one industry executive thinks will happen from here:
John, I predict the following:
- Raise steel prices in the USA by 25%
- Increase the profitability of domestic USA steel companies 5 to 600%
- Make all steel based products produced in the USA much less competitive vs. import steel based products
- Increase unemployment to over 7% in next 18 months
- Reduce GDP to near 0% in next 24 months
- Increase friction with International trading partners further aggravating the balance of payments issue and reducing demand for our export products by retaliation
- This together with the huge deficit spending to occur will drive inflation to over 5% per year and drive dollar value down further
Absolutely the worst thing any President has done to our USA economy in my lifetime.
I appreciate your comments. You can send them to: John@SteelMarketUpdate.com.
Do you think AK Steel will announce the opening of Ashland next week? Will U.S. Steel (whose CEO was singled out by President Trump) fire up their two blast furnaces at Granite City? Will they finish construction of the EAF at Fairfield in Birmingham?
Will slabs be excluded? If not, will the potential loss of jobs at California Steel, NLMK Farrell, Evraz Oregon and JSW overshadow the jobs gained at USS and AK Steel?
Will the loss of jobs at U.S. ports overshadow the job gains at USS and AK Steel?
Will manufacturing that was considering coming back to the U.S. due to tax law changes now not come because of non-competitive steel prices compared to the rest of the world? What about those companies that have been sitting on the edge (leave U.S./not leave)?
There will be much to discuss at our 2018 SMU Steel Summit Conference. We will have Grant Aldonas, former Undersecretary of Commerce during the Bush Administration, as well as trade attorney Lewis Leibowitz, and much more, at this year’s conference. Go to our website to register: www.SteelMarketUpdate.com/Events/Steel-Summit.
Ferrous scrap traded in Detroit at up $10 on shred and sideways on primes. This was done before the 232 announcement.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
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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.
Sheet prices have fallen again this week on shorter lead times, higher imports, and potentially higher inventories. (We’ll see for sure when we release our service center shipment and inventory data next week.) I remember reporting almost exactly the same thing about a month ago and getting a fair amount of pushback. Not so much these days.