Final Thoughts
Final Thoughts
Written by Becca Moczygemba
April 20, 2023
As the ISRI Convention and Expo this week in Nashville, Tenn., comes to a close, I’m sure everyone’s mind is on recycling. While green steel and sustainability have been buzzwords for some time now, evidence of change is growing.
You may recall the announcement of an alliance between US Steel, Equinor, and Shell to establish a hydrogen hub in the Ohio, Pennsylvania, and West Virginia tri-state area. Recently, the Ohio River Valley Institute released a report titled: Green Steel in the Ohio River Valley: The Timing is Right for the Rebirth of a Clean, Green Steel Industry. The report looks at US Steel’s Mon Valley Works in Pennsylvania as an example for transitioning from basic oxygen furnace (BOF) to electric-arc Furnace (EAF). It’s only 75 pages if you’re looking for some light reading. Jokes aside, the Ohio River Valley has been integral in the growth of the domestic steel industry, and it looks like it’s getting some TLC.
According to the report, full decarbonization of steel is within reach. Though technology can sometimes come at a higher cost than the traditional BOF, a combination of replacing fossil fuels with renewable energy or H2, and direct-reduced iron (DRI) can aid steelmakers in reaching their goals.
Currently, there is no global standard for green steel; something the Global Steel Climate Council is working hard to establish. Though there is not a definition etched in stone, the report refers to it as being, “steel that is produced in any way that reduces its carbon footprint.” Of course, the low emissions can be derived from the type of energy a steel mill uses to the amount of scrap they use. Which is why it’s so important to have a set standard.
The tri-state hydrogen hub is currently in the development stages, and recently submitted its application to the US Department of Energy Regional Clean Hydrogen Hubs program (H2Hubs). If you’d like to read more, plans for the hub, a project summary, and an interactive map of the infrastructure concept, can be found on the Decarbonization Network of Appalachia’s website.
By Becca Moczygemba, becca@steelmarketupdate.com
Becca Moczygemba
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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?