Final Thoughts
Final Thoughts
Written by John Packard
June 20, 2018
I spent all day on Wednesday of this week in the Pittsburgh offices of the CRU Group. I was impressed with the people working out of Pittsburgh and was even more impressed with the size and scope of the company here in the United States and across the world. The company indexes all kinds of metals from zinc to aluminum, pig iron, scrap, iron ore to various grades of steel from around the world. CRU maintains cost models on steel production and supports a robust consulting service.
I think those of you who will be attending the SMU Steel Summit Conference this year will have an opportunity to network with a number of the CRU Group team from here in the United States, as well as a number of the management team from London, including the Executive Chairman, Robert Perlman, who will speak with me one-on-one during the last program of the conference on Wednesday afternoon.
Both CRU and SMU will have exhibition booths set up during the conference, so we can address any questions you might have about the various products available from both companies.
I won’t go over my travel plans again, just suffice it to say that 25th of June through the 2nd of July will be quite hectic for both Diana and myself.
Due to the Fourth of July holiday, we will not publish on Tuesday, July 3rd. We will provide our flat rolled and plate price indices on Thursday, July 6th.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
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?