Economy
Letter to the Editor: Marcus Forecast Doubtful
Written by Tim Triplett
July 5, 2018
Steel Market Update received the following comments regarding predictions made at the annual Steel Success Strategies Conference by Peter Marcus of World Steel Dynamics. Steel Market Update did not attend the conference, but we felt the substance of the issues raised by one of our readers would be of interest to all of our readers. We welcome any comments our readers may have on the subject. Here are the comments we received from one reader:
Comments made by Peter Marcus of World Steel Dynamics at the recent Steel Success Strategies conference were surprising. We feel it is highly unlikely HRC pricing in the U.S. will drop by his “estimated $200/ton by the end of 2018.”
It would take some combination of the following fundamental variables to occur for a decrease of that magnitude:
• A significant increase in supply.
• A significant decrease in demand.
• A significant decrease in raw material costs.
• Termination of tariffs/duties.
As it relates to supply, domestic mills remain disciplined in their production levels. Demand is strong. Raw materials are strong. Termination of tariffs is highly unlikely.
Marcus’ comment suggesting an “avalanche of foreign steel entering our country, probably in September” seems to hold little merit. We spoke with several trading companies who have confirmed they remain timid in their approach to importing into the U.S., regardless of pricing. The common feedback we hear is fear of additional trade action, fear of being put on a “quota list,” and hesitancy from U.S. consumers to place offshore orders, wondering if they will receive their steel.
Whether steel survival or steel success, Mr. Marcus certainly had a strategy. In this case, we just wish it would have been silence.
Midwestern Service Center Executive
(Name withheld on request)
Tim Triplett
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