Final Thoughts
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Final Thoughts
Written by John Packard
March 12, 2018
Mexico, Canada, Australia … (Europe, Russia, Turkey?) … which will be the next countries to negotiate directly with President Trump, who appears to be less interested in building steel jobs than getting trade concessions (or personal acknowledgement) out of many of our allies.
With President Trump, you need to review his Twitter account should you miss an excluded country or negotiation position:
In a more recent Tweet, President Trump has suggested that Wilbur Ross is negotiating with Europe so they can be excluded from the steel and aluminum tariffs.
So, my question is: At what point does the Section 232 tariff become irrelevant?
And, what will happen to steel prices once there is more supply than demand? Could we see another 2008-type destruction of steel prices? I think, yes, since the prices are not running up due to true cost fundamentals and will need to reset once supply is back in balance (or steel buyers no longer fear running out of steel and begin cancelling their double-orders).
Key countries to watch when it comes to exclusions: Russia and Brazil (slabs), South Korea (OCTG and line pipe), Taiwan (Galvalume), Japan and Germany (automotive steels), South Africa and India (light-gauge galvanized).
Here is something from a large service center that I have also heard directly from end users: the mills are already destroying their core customer base. “Biggest immediate impact of 232 is extremely concerned customers. Having multiple conference calls, emails, etc., to educate customers on what’s happening. Interestingly, already hearing of strong interest by companies to immediately research viability to source metal parts/components/segments in Mexico and Canada. Yes, that’s right-Canada. These are 2 closest countries and therefore simplest supply chains to consider. There’s an overwhelming feeling of incredulity about the mills’ raising prices without impunity in sync with developments. In this vein, one mill source confided that they think HR goes to $900+, but they’re trying to move up each week so as to not look like they are taking advantage of the situation. I assured him it was too late for that…”
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John Packard
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
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Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
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Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
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Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
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Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!