Final Thoughts
Final Thoughts
Written by John Packard
September 4, 2019
Ferrous scrap prices are starting to settle as of today. Initial checks with some of our scrap sources found prime grades down $40 and obsolete grades down $30 in portions of the Midwest. We learned the Cleveland area mills bought busheling down $20 to $300/gross ton. We also learned of a purchase of HMS at $235/gross ton in Ohio as well. One of our pig iron experts predicted prices will have to move lower despite high iron ore prices. He reported an impasse between producers and consummers, but it will have to breakdown soon. The downward movement in pricing was expected and may help put pressure on flat rolled and plate prices moving forward.
California Steel Industries became the second mill to announce new coating extras. Based on our quick analysis, the CSI coating extras for galvanized steel are down 8 to 10 percent.
I contacted a couple of other coating mills who told me they were looking into their extras and would advise when something changes. My expectation is for most mills to make moves in their galvanized coating extras within the next week to two weeks.
Steel buyers should remain aware of zinc pricing and buyers of galvanized (and Galvalume where you need to watch zinc and aluminum pricing) need to be aware of the variations in extras from one mill to another. Steel Market Update does an analysis of coating extras on our website. You should look under the “resources” tab then “Steel Mills” to “Galvanized Extras” to “Coating Extras Comparison” which has been updated as of today.
If you are notified of any coating extra changes please forward them to info@SteelMarketUpdate.com or directly to me: John@SteelMarketUpdate.com
A reminder that our next (not yet sold out) Steel 101 workshop will be held in Fontana, California and will include a tour of the California Steel Industries steel mill. The dates for this workshop are January 7-8, 2020. We hope to have our registration page up and available within the next few working days.
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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?