Steel Traders to Add Duties and Keep Shipping

A second trader told us earlier in the weekend, “I doubt anybody is really offering other than Mexico and Canada. We’ll all price by 25% duties and a likely worsening exchange rate and put it out there. Keep in mind that duties are paid on FOB values, not CFR [FOB being delivered to USA port].”

Late last week, a third trader provided four points for us to consider:

• Would expect HRC to go to $45.00/cwt after the announcement, CRC to $50.00/cwt and HDG to $52.00/cwt.

• Supply will be extremely tight, especially for HRC. USS I believe is the only U.S. API HRC producer and they are sold out through October already.

• Would expect most customers to pay the 25% for the time being on current, floating and new order bookings.

• Most end users carry a lean inventory. Hence, they will be faced with sudden increases from domestic mills, SSC’s and traders. I would think there is long-term damage to the steel supply chain and a clearly inflationary tendency.

As Lewis Leibowitz pointed out in his article in this evening’s edition of Steel Market Update, there are steel products that are not produced by the domestic steel mills, or are items that they do not like to produce, especially in tight markets. These items will most likely continue to be sourced through foreign steel.

SMU expects the manufacturing companies will be swamped with foreign offers to sell stamped parts or complete units in place of manufacturing here. That is what happed during the Bush administration and most of that production has never returned to the United States.

We will be discussing the subject of manufactured parts and how much steel is coming into the United States via finished goods at this year’s SMU Steel Summit Conference on Aug. 27-29, 2018, in Atlanta. Details are on our website: www.SteelMarketUpdate.com/events/steel-summit