Final Thoughts

November 4, 2019

I have noticed many articles in the mainline press over the past few days slamming the Trump administration’s Section 232 tariffs as not helping the steel industry. Most of the articles point to the recent loss announced by U.S. Steel as proof, along with minimal to no job gains in the industry. I don’t think those writing the articles have spent much time looking at the investments announced by multiple mills, including U.S. Steel, and the impact this new capacity will have on the future competitiveness of the industry. Sure, there will be pain to come for those mills that are unable or unwilling to make investments in their future with new equipment. There will be older mills needing to close in order to make way for the new mills being built. The tariffs, along with antidumping and countervailing duties, have limited imports and allowed the steel mills some breathing room. Where the industry goes from here will depend on demand, both here and in the rest of the world.

John Packard Summit 18 In case you missed it, I have raised our Price Momentum Indicator on all flat rolled products from Neutral to Higher. This means SMU anticipates prices on hot rolled, cold rolled, galvanized and Galvalume to move higher over the next 30 days. The market is still in transition, and we did see some weakness in cold rolled and galvanized based on the information gathered from our survey so far this week. However, I do not believe the low numbers provided are still available in the market and may be more reflective of last week’s pricing. We will continue to work on better understanding steel prices as the rest of the week plays out.

Regarding plate, we are seeing a mixed bag with some believing prices will move lower, into the $500s, while others are pegging the market closer to $650 and anticipating a price increase on plate yet this month. For right now we are not seeing any indicators suggesting a change in momentum and have kept it at Lower for the time being.

I returned from London late on Sunday and I am just getting my Eastern Time Zone legs under me. I was very impressed with the meetings I had in London with CRU and, as I continue to learn more about the company and its history, I think the fit between SMU and CRU was the right deal for both parties.

I am working diligently on the 2020 SMU Steel Summit Conference. Right now, I am keying in on a couple of mill CEOs whose companies I believe will be on everyone’s mind come August 2020. While in London, CRU put on a panel that was killer, and I am going to try to have them reproduce the panel (with some tweaks for the markets we touch) at next year’s conference.

We have made an offer to a TV personality to speak at next year’s conference, someone I believe will have a tremendous perspective on the 2020 election. Yes, we will be in the middle of “crazy” by the end of August. Will our 2020 conference once again correctly predict the winner of the election?

If you have any questions about memberships, upgrades or pricing of our newsletters please contact Paige Mayhair at 724-720-1012 or by email at Paige@SteelMarketUpdate.com. You are also welcomed to contact me if you would like me to answer questions on any of our products. I can be reached at John@SteelMarketUpdate.com

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John Packard, President & CEO