Final Thoughts
Final Thoughts
Written by John Packard
January 25, 2019
I have read a number of articles recently claiming steel prices have gone back to the levels they were when the Section 232 tariffs were announced. This is somewhat deceiving as the domestic mills had been pushing prices up prior to the announcement.
A better benchmark would be to use the historical average on hot rolled coil. If my memory serves me correctly, Peter Wright had defined the HRC average for our Premium members in a recent article at around $610 per ton. If that is correct, we are still a ways away from the average. However, when you take into consideration the 25 percent tariffs, the average should be much higher than the levels being quoted right now.
I wonder sometimes if the market would be more stable with no tariffs? Especially in light of good end-user demand?
I would like to know what you think? You can reach me at John@SteelMarketUpdate.com.
One of our readers recently complained about the rotating banner ads on our newsletter. The complaint was not about the content or who was advertised, rather the distraction from our content the ads were causing. I would like to know if other readers are being noticeably bothered by the rotating ads (again, having nothing to do with the company advertising). Please let me know at John@SteelMarketIpdate.com.
I will be out of the office on Monday-Wednesday of this week as we are conducting one of our Steel 101 workshops in Mississippi and touring SDI Columbus.
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
Getting back to the price increases I mentioned at the top of this article, to what extent are they aimed at raising prices and to what extent are they aimed at stopping the bleeding that was happening in the second half of May, before President Trump announced the 50% tariff?
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.