Final Thoughts

Final Thoughts

Written by John Packard

OK, the Section 232 announcement has been made. Canada and Mexico are in the clear (for the moment) and the president’s attention is now on North Korea and other issues not related to the economy. My advice, don’t panic (unless you haven’t bought any steel over the past few months, in which case you are going to pay a lot for your steel over the next few months).

One of the questions asked of me at the FMA annual conference in Arizona last week: How high can flat rolled steel prices go? Historically, we saw $1,070 per ton on hot rolled steel in late spring 2008. We haven’t had any government interference to this degree, so how high is not yet known.

FMA Audience 3.6.2018But I do think steel buyers should pay attention to their suppliers in the coming weeks. One buyer suggested to me over the weekend that I should start a “Crybaby Price Gouge Misery Index” or the “Ripoff Index,” which probably explains his sentiment on the issue of mill pricing. He commented: “To put this into perspective, we understand there were two EAF mills at $870 and $880 on hot rolled, which is $120 to $130 per ton higher than the $750 per ton suggested by ArcelorMittal USA in their last price announcement (remember when the mills told their customers that increases where coming?). I am not sure why the mills are trying to hide their pricing; could have something to do with being caught rubbing it in after the president gave them a present.”

According to Platts, the most recent Turkish export number on hot rolled coil was $663 per metric ton ($601 per net ton). Add $90 in freight, insurance, trader margin, etc. and the delivered number USA port is approximately $691 per net ton. Add 25 percent to that and you get approximately $173 per ton in duties. $691 + $173 = $864 per ton.

Normally, steel buyers will allow the domestic mills $50 to $60 per ton premium over foreign. If that is the case, the peak domestic price should not exceed $910-$920 per ton ($45.50/cwt-$46.00/cwt) FOB the mill.

However, I have a feeling steel buyers are going to take offense if the domestic mills raise prices to the $900 per ton level since their steel input costs have not increased by $173 per ton (or anywhere near that).

Once offers start coming in for foreign hot rolled, we may actually see a move by U.S. buyers to buy more foreign steel in order to protect themselves from out-of-control domestic steel mills. There will also be a move to buy foreign products in order to make sure there is enough steel in the pipeline to prevent any shortages.

For those of you who buy cold rolled and coated products, the base price levels should not exceed $100 to $140 per ton above the hot rolled base pricing.

That is my opinion at this time. I will be curious to see what foreign offers are made (and at what prices). I did hear over the weekend that a few traders are making offers with pricing that does not include the 25 percent duty, which is the responsibility of the buyer.

SMU is getting a lot of comments about the tariffs. For the moment, I am trying to be conservative in the number that we share since we believe we need to hear more from the market and to learn more about where customers are with their inventories, especially end users.

We are closing in on 150 registrations for our 8th SMU Steel Summit Conference, which will be held at the Georgia International Convention Center on Aug. 27-29, 2018. You can register online or through our office at 772-932-7538 or 706-216-2140.

We have two sponsor spots left (a special thank you to Ratner Steel who signed up as a sponsor late last week). Both are break sponsor spots and are available for $4,000 each. Please contact Jill Waldman if you would like to snap up one of the last sponsor spots. Jill can be reached at

We have a number of exhibition spaces available for this year’s conference. Exhibition space cost is $5,000, which includes one registration for the conference, electrical hookups, WiFi, plus an eight-foot table in our enclosed exhibition and break area next to the main conference room. We expect 800 steel and manufacturing executives at this year’s event. If you would like more information, please contact Jill Waldman or myself,

Our March 2018 Steel 101 workshop in Indiana is sold out. We anticipate our June workshop will also sell out very quickly as it will be special with two mill plant tours (Nucor Hickman and Nucor-Yamato). We are still negotiating with hotels, but we should have those negotiations done before the end of this week. Registration can be made now by contacting Brett Linton at 706-216-2140 or

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher

Photo above was taken from the podium looking out at the FMA attendees last week in Scottsdale, Ariz.

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