Final Thoughts
Final Thoughts
Written by John Packard
June 18, 2018
We are sliding into summer and so far (knock on wood) we are not hearing of any erosion in demand. Those with whom we have spoken over the past week are optimistic about business, although concerned about the uncertainty caused by the Section 232s and now the escalation in trade issues with China using the Section 301 powers of the president.
I participated in the monthly HARDI conference call this morning and we have a recap of the conversation in tonight’s issue.
We made some additions to the SMU Steel Summit Conference, and I am very pleased that CRU Group Executive Chairman Robert Perlman will be joining me on the stage as part of this year’s program. I think those attending will be pleased to hear Mr. Perlman speak about SMU and the CRU Group in general. We will strive to make this “fireside chat” both informative and entertaining. A fitting way to end our 2018 conference.
We have also added Gregg Troian, president of PGT Trucking, and we are adding an executive from Ryder on our transportation panel, as well. I am well aware of the issues facing the trucking industry, and we will do our best to not only broach the subject but also to give our conference attendees some insights into what is being done to improve the situation.
Another reminder that we are working with AK Steel regarding changing the dates for the SMU Steel 201 workshop (the first of its kind out of SMU). The original dates conflict with Jewish holidays, and we want to be sensitive to all of our potential attendees’ needs.
A reminder that I will be in the CRU Group U.S.A. offices on Wednesday (tomorrow). I will return to my office on Thursday and Friday before leaving for New York City early on Monday morning.
I will be participating in a CRU Group New York Steel Briefing on Monday afternoon beginning at 2 p.m. at the Westin Hotel at 270 West 43rd Street in New York. If you would like to attend the CRU Steel Briefing, you may register through Kaitlin Turnley of the CRU Group: Kaitlin.Turnley@crugroup.com.
On Monday evening, I will be hosting the Bank of America Merrill Lynch dinner with their customers, along with a group of steel people, for a discussion of the market from a steel perspective.
On Tuesday. I have meetings set up in NYC before getting on a plane for London where I will meet with the CRU Group management and staff at the company headquarters over the balance of the week. I will return to my office on Tuesday, July 3.
Steel Market Update will not publish on Tuesday, July 3, as we get ready to celebrate the Fourth of July holiday here in the U.S.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
We just wrapped another Steel 101 Workshop, where you take what you learned in the classroom into the steel mill.
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.