Final Thoughts

Final Thoughts

Written by John Packard

Earlier this week I was at the Port of Tampa Steel Conference as I was asked to be the master of ceremonies, and I also moderated the two main panels on Wednesday morning. Both panels dealt with trade issues with the primary focus being on the Section 232 tariffs on steel. The Port of Tampa has, over the years, been a major destination for foreign steel. Especially steels used in the construction industries. The conference attracted 270 people, trading companies, end users, service centers, logistics companies, both land and sea.

Being the moderator put me at a bit of a disadvantage as I was not able to jot down my usual notes as the panels discussed their views on trade policies. Our SMU Steel Summit Conference will get to see a couple of the speakers; Phil Bell, president of the Steel Manufacturers Association, and Paul Lowrey, president of Steel Research Associates, will be speaking to our conference later this year. Bell will be handling his trade duties as we dissect where 232, 301, AD/CVD, USMCA (NAFTA 2.0) and whatever else comes our way come late August.

John Packard Summit 18Getting back to Tampa, the sentiment of the traders was reserved. One steel buyer told me that his traders were telling him they had booked limited tonnage for the U.S. after the month of October 2018. If correct, this would show somewhat in January, but even more so in the February, March and April import numbers. Steel buyers agreed with the assessment SMU has made of the market and market pricing. The mills are “firm” in the opening offers to their customers. Hot rolled is being offered at $700, and with some arm twisting $680 or slightly lower numbers were available. We heard lead times have moved out, especially on coated products. Not all mill books are equal and there are one or two coated mills looking for business. I would expect that we will see some further tightening of flat rolled prices once we start our next flat rolled and plate steel market trends analysis next week.

One panelist I found very interesting was Alice Ancona who is the Director, International Trade and Investment Office, Florida Chamber of Commerce. I spoke with her prior to the conference and she and I discussed the dramatic impact the Section 232 tariffs were having on the state. She told me that many countries have applied tariffs of their own on U.S. products such as oranges and other agricultural products. She told me the fear farmers have is how difficult it will be to get a customer back once they have been replaced. We spoke about soybeans where recent reports show tonnage on the Mississippi River is down 98 percent due to the lack of exports to China.

Ancona also spoke about the impact the rhetoric associated with the trade and immigration discussions here in the U.S. is having on tourism. She told me the “happiest city on earth – Orlando” is seeing a decline in tourism – especially from Canada and Europe. She also told me long-term foreign residents, such as Canadians with second homes here in Florida, were opting to stay away this year.

Of course, Phil Bell of the SMA told the group that the administration’s trade policies were working. He said, “…it’s something that for decades other administrations had been afraid to do, and I’m glad this administration has had the guts and fortitude to do it.”

Bell and Jean Kemp of the SMA, as well as Todd Leebow, President & CEO of Majestic Steel, pointed out the new investments the steel industry has made in new coating lines and steel mills, partially due to 232, but Bell pointed out these projects were in the works for some time. Paul Lowrey pointed out the capacity is needed (he will cover this in much more detail at the 2019 SMU Steel Summit Conference).

Lisa Reisman, Co-Founder and Executive Editor of MetalMiner, did a presentation on how her company views the current metals markets. For steel, she told the group MetalMiner sees prices as going sideways for now. The long-term trend is not for higher prices. She told the group to watch oil prices, which she pegged to remain stuck in the $40-$60 per barrel range.

I will be in my office on Friday and all next week.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, President & CEO

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