Final Thoughts
Final Thoughts
Written by John Packard
May 31, 2019
I am back, well sort of… (I took some vacation days this past week. Did you miss me?)
I will be traveling to Washington, D.C., where I will be speaking with the board of directors of the Steel Manufacturers Association. This will be interesting as there are no prepared remarks, just SMA President Phil Bell and me chatting on stage. Then the mill CEOs get to ask me questions. Usually, it is the other way around. This should be interesting.
I will be back in my office on Wednesday and won’t be traveling again until I go to New York City on the 17th of June.
I am a little disappointed in the response we have received to date for the SMU NexGen Leadership Award, which is sponsored by the Steel Manufacturers Association. If you are the President or CEO of a manufacturer, fabricator, distributor, steel mill, toll processor or supplier to those industries and you have young (35 or under) individuals in your company who are doing exceptional work, you should be recognizing that work by nominating them for the first NexGen Leadership Award. From my perspective, I would be embarrassed not to recognize the strength of the youth you have within your company. The person being nominated does NOT have to be in a managerial role. They don’t have to be in sales or purchasing. They could be doing virtually anything within the company – customer service, logistics, accounting, information technologies, human resources (yes, sales and purchasing are included) or they may indeed be a manager. If you have any questions as to who “qualifies” or would like to run someone by me, I can be reached at 770-596-6268 or by email: John@SteelMarketUpdate.com
Over the last few days of last week we got registrations for the 2019 SMU Steel Summit Conference from: Tate Access Floors, Sentuo Steel Limited (Ghana), Lifetime Products, Steel Summit Holdings, Janus International Group, Norton Metals, Metal Edge Partners, Metal Resource Holdings, Cooper Consolidated LLC, ThyssenKrupp Steel Services & Distribution and Metal Sales Manufacturing.
To register go to: www.SteelMarketUpdate.com/Events/Steel-Summit
If you are having any issues registering, please contact Paige Mayhair at 724-720-1012 or Brett Linton at 770-299-9897 or send an email to Events@SteelMarketUpdate.com. I know CRU is moving to a U.S. based PayPal system and we hope it will be up and running later this week. Do not get frustrated and give up; we will help you through any bumps you might find in the road.
We will be conducting our early June flat rolled and plate steel market trends analysis beginning on Monday through Thursday of this week. If you receive an invitation, please take a few minutes to respond to the first question at the end of the email. You will then be moved to the balance of the questionnaire. Those responding will receive a link to the full PowerPoint presentation we do at the end of the week.
President Trump is placing new tariffs on Mexico beginning in a few days (5 percent first, and then up 5 percent per month until they hit 25 percent). Are you in favor of these new tariffs? I would like to hear from you.
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?