Final Thoughts
Final Thoughts
Written by Tim Triplett
August 10, 2020
The service center and manufacturer executives who read Steel Market Update have been telling us for some time that they believe steel prices are near the bottom and poised to turn around soon. Our latest check of the market, with flat rolled steel prices up anywhere from $15 to $25 per ton, suggests the market may have turned a corner.
A price increase announcement from the EAF mills sometime soon would surprise no one. The integrated mills tried it about a month ago, but the move proved premature and prices gained little ground. This week, the majority (56 percent) of those responding to SMU’s market trends questionnaire said they believe steel demand has now improved to the point where such a price hike could be successful. That means 44 percent are still doubtful, though. Not exactly a slam dunk yet.
Here’s some of their comments:
“I believe the EAF producers will get an increase of no more than $40/ton, unless scrap continues to move down.”
“Prices are too low based on world economics right now.”
“Demand is truly picking up steam. We are very busy with all business segments of our company.”
“I think true demand is growing as many customers are telling me they were busier in July than June. The EAF mills are also telling me they are getting busier these days.”
“They are already [raising prices] one customer at a time.”
“I am not convinced they can get a big increase, but demand seems good enough they should be able to get some. Particularly if the increase isn’t too aggressive.”
“The Galvalume market is strong; however, other steel markets are not seeing the same amount of activity.”
“Lead-times are still fairly normal and it does not seem like service centers are that busy.”
“Maybe [an increase] would stop the bleeding.”
In other news, we published the final agenda today for the SMU Virtual Steel Summit. If you count the number of individual speakers, it totals 48! We have speakers from China, Australia, Germany, England, Chile, Mexico and Dubai, not to mention the U.S. When we said there was going to be a lot of content, we were not kidding.
Registrations for next week’s summit continue to mount, as the number of executives planning to “attend” is approaching the mid-700’s. Here are some of the companies that registered within the past couple of days: Caterpillar*, Midrex Technologies, Steel Manufacturing and Warehouse Co., Crown Equipment*, MetalMiner*, Kloeckner Metals, Vesuvius USA*, Hanwa (HAMCO), NLMK USA*, Willbanks Metals, Teck Metals Limited, Canam, BTD, Imperial Pools, Inc., Jemison Metals and Plateplus. You can join them by clicking here or going to www.SMUsteelsummit.com
On Wednesday, our virtual platform will open for all attendees, sponsors and exhibitors. There are a number of “demo” videos on the SMU Steel Summit website (www.SMUsteelsummit.com) Just click on “Demo Videos” in the toolbar at the top. The demo videos will assist you in navigating around, how to make an appointment with someone, help with networking, etc.
Tomorrow (Wednesday, Aug. 19) at 11 a.m. ET we will have an SMU Community Chat Webinar that will feature our “live” platform. You will be able to see what an attendee sees when he or she first enters the platform. We will answer as many questions as we can about the platform. You do not need to be a registered attendee to participate. Our hope is after you see what we have created, you will break down and spend less than $10 per speaker ($7.29 per speaker if you use the SMU and multi-person discounts) to join us. You can register by clicking here or going to www.SMUsteelsummit.com
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
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?