Final Thoughts
Final Thoughts
Written by John Packard
August 26, 2019
We are not producing our flat rolled and plate steel price ranges and averages this evening as we are tied up with our conference. We will produce new pricing on Tuesday of next week, after the Labor Day Weekend Holiday.
On the elevator up to my room this evening (Tuesday, Aug. 27) was a gentleman who told me, “Man, when you buy a lot of steel it’s like speed dating.” He was referring to the number of suppliers who attend the SMU Steel Summit Conference. He admitted at least he was able to see all of his suppliers in one place without expending extra energy or cost.
The 2019 SMU Steel Summit Conference is officially the best attended conference we have ever hosted. We smashed last year’s tally of 912 attendees as we brought in 1,078 executives to this year’s event. We have had great programs, speakers and incredible networking opportunities for everyone who is here.
For those of you who are worried about who is going to win the next presidential election, our early polling has it a Donald Trump runaway. We conducted a real-time poll of our attendees and got 404 responses. Of those, 53 percent were for Donald Trump, 23 percent for the Democratic candidate, 3 percent for a third-party candidate and 21 percent undecided. In 2016, our polling accurately predicted a Trump victory with twice as many attendees supporting Trump vs. Hillary Clinton. I know we have a year to go and the Democrat has not yet been selected…
On Monday, SMU and the CME Group hosted the largest Managing Price Risk Workshop (steel) in the United States with almost 300 people in attendance. We are looking at conducting new Managing Price Risk Workshops of our own based on the turnout, and the amount of interest our Monday workshop created. If you or your company are interested in learning more about how to use HRC contracts as a way of hedging price risk, please let me know: info@SteelMarketUpdate.com
There is one day left in our conference. It will be a strong day for our attendees as we have a speaker discussing mill costing, economist Alan Beaulieu of ITR Economics, a panel on whether the new steel mill capacity is needed, Ari Fleischer, former press secretary for President Bush, and a panel on banking and finance and how the markets will react should there be an economic slowdown. The conference will end at 2:30 ET.
I look forward to seeing you in Atlanta for one more day.
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
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?
Final Thoughts
With higher tariff rates on steel and aluminum set to go into effect on Wednesday, June 4, a new round of chaos across the supply chain is likely in store. Expect a significant impact on manufacturers and metal fabricators. But even before the latest round of Trump-tariff whiplash on Friday evening, there was a lot of interesting data coming out of SMU's steel-market survey.