Final Thoughts
Final Thoughts
Written by John Packard
May 7, 2018
The final circumvention decision on Vietnam is due tomorrow, but will not be announced to the public until Thursday. We will have a full article and comments from trade attorney Lewis Leibowitz in Thursday evening’s issue of Steel Market Update.
The recent Court of Appeals case may have some impact on the Vietnam final determination. It is not yet clear what will happen.
One area of concern is determining the origin of material. There is going to be a lot of discussion about what processing is “significant” and what is “minor” as that could impact the country of origin. SMU expects there will be complaints against (for example) OCTG coming out of Korea that is made from Chinese substrate.
Earlier this week, we sent out a link (same link as shown below) to all of our members asking for a few moments of your time so that we can learn more about our clients, as well as what we are doing right and what we could do better as we expand and look to improve our products and services. Please, if you have not already answered, Click here to give us your feedback. Thank you in advance for your time and insights.
Our Steel 101 workshop is totally sold out and we have a waiting list. A special thank you to Nucor for allowing us to tour their Arkansas plants at Hickman and Nucor-Yamato. I am looking forward to announcing our next workshop, which will be in either late September or early October at a mill we have not toured before. Stay tuned for details.
There is still plenty of room for more attendees for this year’s SMU Steel Summit Conference. We are closing in on 450 registrations on our way to 800 executives. This will be a tremendous networking opportunity for anyone associated with the flat rolled, plate or pipe and tube markets. If you have not been to a Steel Summit Conference, you are in for a treat. If you have any questions, please do not hesitate to contact me at 800-432-3475 or info@SteelMarketUpdate.com and I will do my best to twist your arm… Details and registration can be found at www.SteelMarketUpdate.com/events/steel-summit or by calling our office at 772-932-7538.
Tim Triplett and I will be at the Metals Industry Boy Scout Dinner at the Hyatt in downtown Chicago on Thursday. I spoke with Lori Hahn of Steel Dynamics earlier today and she told me there are still some tables and individual tickets available. Click on the sidebar ad in this newsletter to find more information and to register.
As always, your business is truly appreciated by all of us here 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?