Final Thoughts

Final Thoughts

Written by John Packard


I received numerous notes regarding a hot strip mill outage at AMNS Calvert, which began last week. Based on reports from steel buyers, the HSM outage was expected to last for about one week. We asked ArcelorMittal for information and confirmation yesterday, but they failed to respond. Today, we received information that the Calvert lead times have moved out, partially because of the outage and partially because of strong demand in “auto and energy….” Not quite sure what to believe. The lead times on hot rolled and HRPO are now longer than those for cold rolled and coated at the week of Nov. 24 vs. Nov. 3 on cold rolled and Nov. 17 on coated.

Since Calvert is a slab conversion mill, we looked at another converter to see if their lead times reflected similar moves, potentially indicating a tightening of the market. We looked at NLMK lead times for Farrell and hot rolled was being quoted as the week of Oct. 14 and HRPO the week of Oct. 21. Cold rolled fully processed was the week of Nov. 11, while galvanized was the week of Nov. 4.

John Packard Summit 18Earlier today, I read an article in the Washington Examiner regarding the number of approved exclusion requests granted by the U.S. Department of Commerce. According to the article, the Trump administration has been approving almost half of the requests made on steel and aluminum. I asked trade attorney Lewis Leibowitz if there was a way to quantify the exclusions being granted by tonnage. After all, if U.S. Steel made objections on tonnage that exceeds the entire production capability of the U.S. steel industry, and almost half are being accepted…. Does that mean that more tons may be excluded than actual foreign tonnage being imported prior to the Section 232s being put in place? I do not know the answer to that question, but I am trying to find out.

Leibowitz sent me to a report produced on Aug. 21, 2019, by the Mercatus Center of George Mason University about the Section 232 tariffs. The report (which you can obtain by clicking on this link) said that as of July 30, 2019, there have been 62,797 steel tariff exclusions requested by 836 manufacturers across 288 congressional districts. This was up 17,469 requests since mid-March of this year.

Of those requests, 30,545 or 49 percent have been approved. Another 13,261 (21 percent) were denied, and 18,991 (30 percent) remained pending.

Interesting to note, the domestic steel producers filed 22,210 objections. As of the end of July, U.S. steel producers objected to 153.5 million metric tons (169.2 million net tons), far exceeding the production capabilities of the domestic mills. Combined, Nucor and U.S. Steel filed 59 percent of the objections based on tonnage (approximately 100 million net tons).

Nucor, which can produce 24.4 million metric tons, has filed 41.9 million metric tons of objections. U.S. Steel, which can produce 14.4 million metric tons, has filed 48.8 million metric tons of objections. AK Steel, which can produce 5.6 million metric tons, has filed 30.0 million metric tons of objections. All of this data came from the report mentioned above with the source data being the U.S. government.

Our next Steel 101 workshop is Jan. 7-8, 2020, in Ontario, Calif., and will include a tour of the California Steel Industries steel mill. The two-day workshop has been upgraded recently as we have added a new instructor (Sandy Simon) to complement Roger Walburn, Chuck McDaniel, Mario Briccetti and me. You can find more details on our website: www.SteelMarketUpdate.com/events/steel101

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, President & CEO

Latest in Final Thoughts

Final thoughts

What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.

Final thoughts

Unless you've been under a rock, you know by know that Nucor's published HR price for this week is $760 per short ton, down $65/st from the company’s $825/st a week ago. I could use more colorful words. But I think it’s safe to say that most of the market was not expecting this. For starters, US sheet mills never announce price decreases. (OK, not never. It has come to my attention that Severstal North America rescinded a price increase back on Feb. 14, 2012. And it caused quite the ruckus.)