Final Thoughts
Final Thoughts
Written by Tim Triplett
June 25, 2018
John Packard is on an airplane somewhere over the Atlantic, on his way to meet with our new colleagues at the CRU Group, which is headquartered in London. I’m sure John would agree, as he travels far away, that this comment from a Steel Market Update subscriber hits very close to home.
Responding to our query this week about the current atmosphere for pricing and mill negotiations, one service center executive shared the following thoughts: “Domestically, there isn’t much to negotiate. The number is the number. For imports, it’s all about the continued uncertainty of what the next tweet could be and how to do business without knowing the rules. There has NEVER been a time when having good business partners, not just vendors but true business partners, has been more important.”
I think the message holds true for all types of relationships. Steel Market Update was acquired by the CRU Group less than a month ago, so our partnership is still evolving. But the synergies between the two organizations are unmistakable and the possibilities are limitless. When John gets back from London, I’m sure his head will be full of new ideas for new products and new programs to help Steel Market Update subscribers navigate today’s treacherous steel market.
Tim Triplett
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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.