Final Thoughts
Final Thoughts
Written by John Packard
May 21, 2018
I spent most of today canvassing the flat rolled and plate steel markets. A portion of the results of my inquiries can be found in our pricing article (indexes) and Tim Triplett’s article entitled, “SMU Q&A: No Signs of a Price ‘Breakout’ Either Way.”
Many steel buyers are confused by the lack of clarity in the markets. I had a conference call with a manufacturing company who tried to pick my brain as they asked me to forecast what the highs and lows could be over the next 12 months. In a normal market, that range could well be $500-$700 per ton for benchmark hot rolled. In a normal market, the spread between base price HRC and CRC and GI/AZ would be $100-$140 per ton.
We are not in a normal market. The rules have changed, and not just by a little bit.
The U.S. government is deeply involved in the steel industry. Steel is being used as a bargaining chip as NAFTA and other negotiations take center stage for the Trump administration.
The rules changed when the U.S. Department of Commerce affirmed that Vietnam (and China through Vietnam) was circumventing antidumping and countervailing duties. At the same time, there has been a shuffling of the deck as to what constitutes “significant transformation,” thus altering the country of origin (at least that is how it worked in the past).
The rules changed when the U.S. Department of Commerce “self-initiated” a trade case.
There are many more changes. Too many to cite here.
So, the answer I gave to the manufacturing company was a low of $480 per ton (Trump drops all trade cases and foreign steel floods the market) to a high of $1,000 per ton. (The manufacturing company told me that John Anton of IHS Markit pegged the high end to be $1,200 per ton as he was forecasting a shortage of steel later this year. Mr. Anton will be speaking at this year’s SMU Steel Summit Conference.)
We checked on what was happening with the West Coast steel mills today. Flat rolled steel supplies are tight on the West Coast. California Steel Industries is booking July now, while USS/POSCO is booking August, sources tell Steel Market Update. With demand still strong, and trade action in Washington still unsettled, the region may not see the usual seasonal dip in pricing in this year’s fourth quarter, commented one executive.
Our SMU Steel Summit Conference has broken through the 500-person registration level as we charge ahead toward our goal of 800 manufacturing, distribution, steel mills, traders, toll processors and suppliers to the industry. Our event will be THE premier conference both in content as well as the quality of the attendees. Go to www.SteelMarketUpdate.com/Events/Steel-Summit for details, list of companies registered to date and information on costs and how to register. If you are at all confused, please call me, 800-432-3475, or send me an email: John@SteelMarketUpdate.com.
I want to thank the companies who responded to our request for help as we look forward to a strong year of growth and changes within our company. If you have ideas you would like to discuss with me, my office door (phone and email) are open. Do not hesitate to give me a call.
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
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?
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.
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.
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).
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!