Final Thoughts
Final Thoughts
Written by John Packard
March 27, 2019
I want to make sure that all of you thinking of attending this year’s SMU Steel Summit Conference are aware of some of changes, so you can plan your schedules accordingly. First, the CME Group will be hosting a Price Risk Management Workshop in the Atlanta Airport Marriott Gateway Hotel (next to GICC) from 10:30 a.m. until noon on Monday, Aug. 26. Second, the conference will begin on Monday afternoon at 1 p.m. in the Georgia International Convention Center. First up will be Chris Houlden and Josh Spoores of the CRU Group and myself. We will be discussing some of the proprietary indices we produce, and CRU will discuss their price forecast for the balance 2019 and 2020. Third, the CRU Group will host an Aluminum Conference immediately following the SMU Steel Summit Conference.
To learn more about the CRU Aluminum Summit Conference, please use this link: http://bit.ly/2uwwEz1
Some of the companies that registered executives for the 2019 SMU Steel Summit Conference during last 24 hours (companies with * have more than one person): Steel Dynamics*, Precoat Metals*, Agway Metals*, AGCO, U.S. Steel*, Spantek Expanded Metal, Central Steel & Wire*, Nucor Tubular*, Nucor Sheet Mill Group*, Southwark and Ryerson*. The total number will soon exceed 250 registered attendees with five months to go until the event. You can register online by clicking here.
I intend to put out a much more detailed email regarding our conference, agenda and speakers in Sunday evening’s issue of Steel Market Update.
For those of you who will be in New York City on June 17, the CRU Group will conduct a free Steel Briefing for clients of CRU and SMU. Let us know if you are interested and we will provide a registration link.
My next business trip is not until Monday, April 15 & 16 when I will be in Orlando for the Air Distribution Institute. So, I will be stationary for the next couple of weeks for those who would like to speak with me. I can be reached at 800-432-3475 or by email: John@SteelMarketUpdate.com.
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
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?