Final Thoughts
Final Thoughts
Written by John Packard
December 11, 2019
CNBC reported comments made by White House Economic Advisor Larry Kudlow on Tuesday saying, “The reality is those tariffs are still on the table.” This is in reference to the tweet from President Trump regarding steel from Brazil and Argentina. Steel buyers should be aware that there has not been a presidential proclamation, or anything published in the Federal Register, regarding the “threat” of these tariffs becoming reality.
The other big rumor is there is a possible China deal about to be announced. Again, as trade attorney Lewis Leibowitz put it to me this afternoon, there are only about three people who truly know what is going on with the China negotiations. However, this afternoon, CNBC is reporting that a deal has been made in principle pending President Trump’s approval.
The reason why this is of concern is the deadline for a deal is the 15th before the next round of Section 301 tariffs go into place. Rumors are the Trump administration has offered to scrap the tariffs set to take effect on Sunday and cut some of the existing duties in half (CNBC).
An interesting tidbit for those of you old enough to remember the gas lines of the 1970s, October 2019 was the first month in which the United States exported more crude oil by sea than it imported, with exports reaching a new record of 12.95 million tonnes. Imports of crude have fallen since the start of the year and totaled 11.1 million tonnes in October. Last October (2019), imports of crude were 16.9 million tonnes.
When including Canadian imports that come by rail, the U.S. is still a net importer of crude.
Prior to December 2018, U.S. companies were banned by the U.S. Congress from exporting crude oil.
As mentioned in an article above, SMU adjusted our plate price momentum indicator to Higher from Neutral. The plate markets have been tough to call as the mills struggle to get prices up. It appears they are beginning to make some traction and are being supported by decent lead times and higher scrap prices. Ultimately, as one of the plate buyers put it, demand will determine if all of the increases stick.
For those wondering, I am more bullish about this round of price increases than I have been during the rest of calendar year 2019. I am hopeful the markets are strong enough to support a normal price cycle of three to six months as opposed to six to ten weeks.
I am bullish even though Alan Beaulieu of ITR Economics is forecasting a slowdown in Q1 and Q2 2020. However, it is a slowdown, not a recession, that he is forecasting. He believes 2020 will look somewhat like 2019 when all is said and done.
For those interested in attending one of our Steel 101 workshops. Our California workshop is now 90 percent full. We have approximately 5-7 seats left. The dates on this workshop are Tuesday, Jan. 7, and Wednesday, Jan. 8, 2020. I will be at this workshop as we work with our attendees to better understand how steel is made by both the EAF and integrated mills. How plate, flat rolled and long products are rolled. How various qualities of steel are made, how steel is bought and sold and how various influences affect the markets. You can learn more about the workshop, costs and how to register at www.SteelMarketUpdate.com/Events/Steel101 or you are welcome to contact me with any questions that you might have: John@SteelMarketUpdate.com
The next Steel 101 workshop after California will be held in the Portage, Ind., area in early April and will feature a tour of the NLMK USA Portage EAF mill. I expect details to be released on this workshop sometime next week.
For those of you who have not put our 2020 SMU Steel Summit Conference on your calendars, the dates are Aug. 24-26, 2020. The site continues to be the Georgia International Convention Center (www.GICC.com) right next to the Atlanta airport. The pricing for the 2020 event will be the same as 2019 even though we are adding a Monday lunch to the agenda, and we have expanded the pre-conference program on Monday morning to contain two programs. The conference will begin at 1 p.m. on Monday afternoon, first networking/cocktail party begins at 4 p.m. on Monday. Conference will end with a bang around 2:30 p.m. ET on Wednesday. For those of you who have not attended an SMU Steel Summit Conference, we will have a big-name speaker after lunch on Wednesday. With 2020 being an election year, you will want to stay for the full program….
I a
m very much involved in selecting speakers for what will be a tremendous program for 2020. We will focus on forecasting market segments, looking at raw materials, have one-on-one interviews with key people in the industry, Alan Beaulieu of ITR Economics will be a keynote speaker once again and we will have some surprises in store for the 2020 attendees.
Also, for those of you who buy aluminum, CRU will conduct an Aluminum Summit on Wednesday afternoon and Thursday (Aug. 26 & 27) at the Marriott Gateway Hotel next to the GICC.
If you are interested in being a sponsor or exhibitor at the 2020 conference, please contact Jill Waldman at Jill@SteelMarketUpdate.com or you can contact me. We have limited sponsor spots left, and we have already filled half of the exhibition space (which is twice as large as the 2019 conference).
Paige Mayhair is available to anyone who needs to renew their membership, or to those who would like to upgrade or begin a new subscription to Steel Market Update. You can reach Paige at 724-720-1012 or by email at Paige@SteelMarketUpdate.com
As always, your business is truly appreciated by all of us at Steel Market Update.
John Packard, President & CEO
John Packard
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!