Final Thoughts
Final Thoughts
Written by John Packard
October 4, 2019
I will be out of the office this entire week traveling first to Cincinnati as we conduct our sold-out Steel 101 workshop on Tuesday and Wednesday. Later in the week I will be traveling to Minnesota (where I see temperatures are supposed to be in the 30’s for highs) for a Board of Trustees meeting for Hamline University.
On Monday, SMU will send out invitations to participate in our early October flat rolled and plate steel market trends survey. Invitations will go out at 8 a.m. ET. If you receive an invitation, please take a few minutes to answer the first question at the end of the email, which will then take you to the entire questionnaire. If you used to get an invitation, and for some reason they have stopped – check your SPAM folder.
If you would like to be added to the invitation list, please send your request to info@SteelMarketUpdate.com.
We will send out our Service Center Inventories and Shipments “Flash Report” on Monday. There are some surprises contained in the report, which is provided only to data providers. The full report, which is provided to both data providers and our Premium level members, will be available on Oct. 14. If you are a service center who inventories prime flat rolled or plate steel products in the United States, and you would like to participate in our monthly analysis by providing your company’s data on a confidential basis, please contact me at John@SteelMarketUpdate.com or Estelle.Tran@crugroup.com. If you are an Executive level member and you would like to receive our breakdown of Service Center Shipments and Inventories data, please contact Paige Mayhair at Paige@SteelMarketUpdate.com
Registration is open for our January 2020 Steel 101: Introduction to Steel Making & Market Fundamentals Workshop, which will be held in Ontario, Calif. (Los Angeles area) on Jan. 7-8. Included will be a tour of the California Steel Industries (CSI) steel mill. Details can be found 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
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?