Final Thoughts
Final Thoughts
Written by Tim Triplett
July 10, 2020
John Packard (who is traveling) says his sources are telling him that JSW’s flat roll mill in Mingo Junction, Ohio, may be shutting down (not taking orders) for an unknown amount of time. No confirmation or details yet from the company.
John also reports that Steel Dynamics ran the first coil through the new #3 galvanizing line at its mill in Columbus, Miss., last week. SDI announced in June 2018 that it planned to invest $140 million to add a third galvanizing line at its Columbus Flat Roll Division. The new galvanizing line has an annual coating capability of 400,000 tons.
The coronavirus pandemic has been dominating the headlines since mid-March. Public opinion seems to have vacillated between panic and indifference from one week to the next. Within the steel industry, views have evolved dramatically over the past few months as seen in the charts below.
In May when we asked readers how quickly they thought business would return to pre-COVID levels, this was the distribution of responses to SMU’s market trends questionnaire. The majority saw the virus running its course by the end of July, and almost all by the end of the year. Only 7 percent acknowledged the crisis could extend into next year.
This week’s responses reveal a much more sobering outlook, with 43 percent anticipating the virus will impact their businesses into the first or even second quarter of 2021.
As disconcerting as the pandemic is, especially with reports of surges in various parts of the country this week, we know a lot more about the virus than we did a couple months ago and can now make more informed and realistic plans on how to deal with it.
Andre Marshall, president and founder of Crunch Risk, LLC, will offer his insights on how the coronavirus is impacting the steel futures market as the featured speaker during SMU’s next Community Chat webinar this Wednesday, July 15. The webinar begins at 11 a.m. ET and is free to anyone in the industry. Click here to register.
Registrations continue to grow for the 2020 SMU Virtual Steel Summit Conference For more information visit www.SteelMarketUpdate.com and click on the SMU Virtual Steel Summit link. Or to register, click here.
As always, your business is truly appreciated by all of us here at Steel Market Update.
Tim Triplett, Executive Editor
Tim Triplett
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Final Thoughts
We just wrapped another Steel 101 Workshop, where you take what you learned in the classroom into the steel mill.
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.