Final Thoughts

Final Thoughts

Written by Tim Triplett

Claiming national security concerns over a slump in the U.S. steel market, President Trump issued a proclamation late Friday that appears to amend the quota limits on Brazil, further restricting steel imports from South American nation. While it’s unclear at this point which products will be affected and to what degree, one source tells SMU the change may further limit imports of Brazilian slabs in the fourth quarter.

The president’s proclamation states: “The United States will lower, for the remainder of 2020, one of the quantitative limitations set forth in Proclamation 9759 applicable to certain steel articles imported from Brazil. In my judgment, this modification will preserve the effectiveness of the alternative means to address the threatened impairment to our national security by further restraining steel article exports to the United States from Brazil during this period of market contraction.” Click here to read the entire proclamation. Look for further details in Tuesday’s SMU.

On another subject, here’s some of the more quotable quotes from SMU’s Steel Summit this past week:

“We are all in an international market riding a bus where the driver of the bus is China, and he is taking us wherever he needs to go.”

Jose Gasca, Metrading International AG, on China’s dominance in the global steel market.

“I don’t know of any steel company in the world that is aiming to have a smaller participation in the auto industry.”

Lourenco Goncalves, Cleveland-Cliffs CEO, when asked if Cliffs’ subsidiary AK Steel is too dependent on the automotive market.

“Go ahead and underestimate us, that is going to be fun.”

David Burritt, president of U.S. Steel, on his company’s “best of both” strategy to combine integrated and EAF steel production.

“Seventeen million tons came offline abruptly during the crisis. We think only about half will come back and will offset the 6-7 million tons of real capacity that is actually coming onto the marketplace. We don’t believe there is anything to worry about.”

Steel Dynamics President Mark Millett, downplaying concerns about a “Steelmageddon” scenario in which mills like SDI’s planned expansion in Texas will oversupply the market and drive down steel prices.

“If EAFs can crack exposed body panels, it becomes tenuous to be an integrated mill.”

Analyst John Anton of IHS Markit on the possible competitive shift among suppliers to the auto sector if minimills succeed in producing sheet products of high enough quality for the most demanding vehicle applications.

“It’s not an expectation, it’s a reality.”

Big River Steel President David Stickler on the likelihood minimills will compete for the automotive market’s exposed panel business.

“The economy is not broken.” And: “Don’t assume the election will make or break your world.”

ITR Economics President Alan Beaulieu, offering a reassuring forecast on the U.S. recovery.

Thanks again to all those who attended and supported our virtual steel summit. Remember, the conference platform remains open and the programming accessible until Sept. 18.

As always, your business is truly appreciated by all of us here at Steel Market Update.

Tim Triplett, Executive Editor

Latest in Final Thoughts

Final thoughts

I’ve had discussions with some of you lately about where and when sheet prices might bottom. Some of you say that hot-rolled (HR) coil prices won’t fall below $800 per short ton (st). Others tell me that bigger buyers aren’t interested unless they can get something that starts with a six. Obviously a lot depends on whether we're talking 50 tons or 50,000 tons. I've even gotten some guff about how the drop in US prices is happening only because we’re talking about it happening.

Final thoughts

We’ve all heard a lot about mill “discipline” following a wave of consolidation over the last few years. That discipline is often evident when prices are rising, less so when they are falling. I remember hearing earlier this year that mills weren’t going to let hot-rolled (HR) coil prices fall below $1,000 per short ton (st). Then not below $900/st. Now, some of you tell me that HR prices in the mid/high-$800s are the “1-800 price” – widely available to regular spot buyers. So what comes next, and will mills “hold the line” in the $800s?