Final Thoughts
Final Thoughts
Written by John Packard
June 14, 2019
Happy Father’s Day to all of the fathers reading tonight’s issue.
I will be in New York City participating in the CRU Steel Briefing, which will be held at the Sheraton Hotel in Manhattan on Monday afternoon. Later that evening I will be attending the Bank of America Merrill Lynch steel dinner hosted by Timna Tanners, their metals and mining analyst. I do have some time on Tuesday morning should someone want to speak with me while I am in New York City. I will be returning to my office on Wednesday morning.
I wish to highly encourage companies to nominate young talented employees who are performing at an exceptional level, or who have shown themselves to be highly creative, for the SMU NexGen Leadership Award. So far, we have had approximately 50 companies inquiring through the website looking for information and we have started to get the first trickle of nominations coming in. This award, sponsored by the Steel Manufacturers Association, will allow those nominated, and especially the winner, to be recognized for his or her contributions. We hope it will encourage more young people to consider careers in manufacturing, fabrication, steel distribution, steel mills, toll processors and other companies that work with mild carbon and advanced high-strength steels. Support your team by nominating your young up-and-rising stars. For more details go to: www.SMUAward.com
Things are starting to get hectic (even more hectic) as we finish our preparations for the 2019 SMU Steel Summit Conference. We are sitting at 700 executives registered from about 300 companies. We still anticipate 1,000 decision-makers from more than 400 companies when the final tally comes in. If you would like to learn more about the agenda, speakers, sponsors, exhibitors, hotels, costs to attend and how to register go to: www.SteelMarketUpdate.com/Events/Steel-Summit. If you are having any issues with registration please contact Brett Linton at 770-299-9897 or email Events@SteelMarketUpdate.com
Paige Mayhair is on vacation this week and her job is being covered by Brett Linton. If you have questions about renewals, upgrading your membership or becoming a subscriber to SMU, please contact Brett@SteelMarketUpdate.com or call him at 770-299-9897.
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?