Final Thoughts
Final Thoughts
Written by John Packard
July 31, 2020
As if a pandemic wasn’t enough, now I have to muddle through a tropical storm (it was a hurricane but lost some of its punch overnight on Saturday). Fortunately, Florida residents consider tropical storms as nothing more than a nuisance. I have my fingers crossed that we don’t pick up a hurricane until after our conference is over….
Congratulations to Mark Bush who was named the CEO for JSW USA.
It is going to be a busy week with a new flat rolled and plate steel market trends survey beginning at 8 a.m. on Monday morning. Our service center data providers begin providing inventory and shipment data Monday as well. We should have a better feel for any shifts in momentum by the end of this week, although my gut feel is we are close to a bottom, if not at the bottom on hot rolled prices (with the low end being in the very low $400’s per ton).
We have not yet named a speaker for this Wednesday’s SMU Community Chat Webinar. We should have one confirmed in the morning, and we will advise as soon as we do.
Registrations are breaking through 600 executives and counting for the 2020 SMU Virtual Steel Summit Conference. If you register by Aug. 5 you will be eligible to receive one of our welcome packages. Yes, we are sending a welcome box from SMU as well as a number of our gold and platinum sponsors. You can register by clicking here or going to www.smusteelsummit.com
Here are some of the companies who registered for the 2020 SMU Virtual Steel Summit Conference late last week: Komatsu Mining Corp, Colakoglu Metalurji A.S., Wayne Brothers, Inc., Argus Media, UBS Securities*, NB Handy, Flack Global Metals*, Stelco, Griffin Trade Group, Metal One America, Steel & Pipe Supply, Jade Metals Corp, Viking Materials Inc., High Steel Service, Apex Tool Group, EXLTUBE*, ArcelorMttal Dofasco* (those with an * means more than one person registered). You can join them by clicking here or going to www.smusteelsummit.com
This will be another hectic week for me as we continue to prepare for our first virtual steel conference. If you are wondering about our platform, you can view the recording made last week during our SMU Community Chat when we unveiled the platform and explained how it will work. You can view the recording by clicking here or going to: www.SteelMarketUpdate.com/blog/smu-community-chat-webinars
If you want to renew, upgrade or join Steel Market Update, please contact Paige Mayhair at 724-720-1012 or by email: Paige@SteelMarketUpdate.com
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?