Final Thoughts
Final Thoughts
Written by John Packard
March 23, 2018
I will be traveling beginning on Tuesday afternoon as I head to Chicago to conduct one of our Steel 101 workshops. I want to take a moment to thank NLMK USA for their hospitality as we will be touring their Portage minimill on Wednesday of this week. I will not return to my office until next Monday, April 2. During my absence, I can be reached on my email or you can contact our office at info@SteelMarketUpdate.com.
Our next workshop will be held in Memphis, Tenn., and will include (for the first time) two mill tours. We will tour Nucor Arkansas (Hickman) and Nucor-Yamato, which is a beam and Castrip mill. You can find more information about the Memphis Steel 101 workshop on our website: www.SteelMarketUpdate.com/events/steel101
If you need to contact our office next week, please contact Diana or Alison at 772-932-7538. They can handle payments, questions about Steel 101 or SMU Steel Summit, handle registrations or any issues that you might be having with your account.
Bloomberg is reporting that the U.S. and South Korea are close to a final deal that will provide a cap on the tonnage of steel Korea will be allowed to send to the United States. Philip Gibbs with KeyBanc Capital Markets expressed an opinion that the goal may be to cap at 2017 import levels. He is of the opinion if that were the case the U.S. mills would gain market share in the pipe and tube markets.
This would be bullish for hot rolled steel usage and pricing.
It was a crazy week last week and I expect nothing but more of the same this week. Not a good time to go on vacation…
As always, your business is truly appreciated by all of us at Steel Market Update.
John Packard, Publisher
John Packard
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Final Thoughts
Steel equities and steel futures fell hard after news broke earlier this week that the US and Mexico might reach an agreement that would result in the 50% Section 232 tariff coming off Mexican steel. The sharp declines didn’t make much sense, especially if, as some reports indicate, Mexico might agree to a fixed quota. They didn't make sense even if steel flows between the US and Mexico remain unchanged.
Final Thoughts
Even before the news about Mexico, I didn’t want to overstate the magnitude of the change in momentum. As far as we could tell, there hadn’t been a frenzy of new ordering following President Trump’s announcement of 50% Section 232 tariffs. But higher tariffs had unquestionably raised prices for imports, which typically provide the floor for domestic pricing. We’d heard, for example, that prices below $800 per short ton for hot-rolled (HR) coil were gone from the domestic market – even for larger buyers.
Final Thoughts
I want to draw your attention to SMU’s monthly scrap market survey. It’s a premium feature that complements our long-running steel market survey. We’ve been running our scrap survey since late January. And over just that short time, it’s become a valuable way not only for us to assess where scrap prices might go but also to quantify some of the “fuzzy” indicators - like sentiment and flows - that help to put the price in context.
Final Thoughts
I think there is an obvious case for sheet and plate prices going higher from here. That’s because, on a very basic level, the floor for flat-rolled steel prices, which is typically provided by imports, is now significantly higher than it was a week ago.
Final Thoughts
We're about to hit 50% Section 232 steel tariffs. What could happen?