Final Thoughts
Final Thoughts
Written by John Packard
November 2, 2018
The threat of any disruption at either U.S. Steel or ArcelorMittal USA is now off the table as AMUSA has reached a tentative deal with the United Steel Workers. U.S. Steel had reached an agreement a couple of weeks earlier. Now the industry focus is going to be on how much supply is coming online (and when) and what, if anything, it will mean for flat rolled prices in the coming months?
A reminder that our Toledo Steel 101 workshop is sold out and has a waitlist. We have opened registration for our January Steel 101 workshop, which will be held in Starkville, Miss., on Jan. 29-30, 2019. We will tour the Steel Dynamics mill, which includes a paint line (which we also anticipate touring when at the facility). We have an exceptional set of instructors in Peter Wright, Roger Walburn, Chuck McDaniels, Mario Briccetti and me. You can learn more about the workshop by going to our website: www.SteelMarketUpdate.com/Events/Steel101 or you can contact my office at 800-432-3475.
I will be in the office all this week. Next trip for me is to CRU’s USA headquarters in Pittsburgh on the 12th of November. Then I will be in Austin, Texas, on Dec. 1-3 for the HARDI conference before heading to Toledo for our December Steel 101 workshop.
I want to welcome all of you who are new to Steel Market Update. I encourage you to interact with us, which you can do by sending an email with your suggestions or comments. Please send them to: info@SteelMarketUpdate.com
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
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?