Features
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/Tampa.Steel_.Conference.jpg)
Tampa Steel: Navigating risk, pricing in a volatile trading environment
Written by Laura Miller
February 2, 2024
Just like doing business in any part of the steel supply chain, there are risks and unknowns in trading steel. Trading companies play an important part, helping businesses to navigate the uncertainty as issues arise.
“It’s the non-steel part of the business that can make a huge difference. A lot of trading companies supply value that’s just as important as the specifications of steel,” said international trade attorney Lewis Leibowitz, owner of the Law Office of Lewis E. Leibowitz.
He was speaking on the “Trade Matters: The Value of a Flexible Steel Supply Chain” panel at the Tampa Steel Conference on Monday, Jan. 29. Joining him on the panel were Jose Gasca, managing director of Metrading International, and Brion Talley, president and CEO of JFE Shoji America.
The values that trading companies supply include risk management, reliable delivery, and problem solving.
Traders manage a risky business
While many consider importing steel to be a risky business, Talley pointed out that it’s the job of trading houses to manage that risk as professionals.
“It’s managed risk, known risk, risk we enjoy,” he noted.
Such risks include things like the Section 232 tariffs. Those levies were quickly imposed in 2018 without warning, but trading companies learned how to navigate them to keep products moving. Talley’s staff, for example, has become quite adept at working with exclusions.
Another risk in the current market is traversing the Panama and Suez canals.
Leibowitz said of fighting in the Red Sea affecting the Suez Canal: “It’s a dangerous situation but one that people in the business are managing.” Diversion is one of the key ways to manage that particular risk, he noted.
The panelists estimated that transiting the Cape of Good Hope to avoid the Red Sea adds approximately three weeks to a product’s trip.
Part of being a responsible trader is having arms-length knowledge of what’s going on in the world. Customers pay trading companies to assess the risk in situations and make informed decisions on how or where to move product, Gasca said.
Is it all about price?
While price is a part of the equation, when it comes to importing steel, a long-term business model that takes much more into account.
“Steel isn’t fungible. It’s hype that it’s all about price.”
– Lewis Leibowitz
Talley said that most customers buying offshore material are “buying month in and month out.” If customers were buying solely on price, traders wouldn’t be in business, he said. Traders need regular customers just like other companies in the supply chain.
Some products are simply not available from domestic producers because of reasons as diverse as specifications, tolerances, and alloy content, Leibowitz said. Companies buying offshore material for those reasons will continue to do so, regardless of price, unless there is some sort of “long-term, catastrophic shift,” he said.
“Trade can be a valuable part of a vibrant supply chain for US steel,” Talley added.
Talley said the drought on the Panama Canal could lead to ships choosing to go around Cape Horn in southern Chile. But he also noted that it was a manageable situation that the marketplace would sort out with time.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/02/SMU_LM_headshot.png.jpg-150x150.png)
Laura Miller
Read more from Laura MillerLatest in Features
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/oil_drill.png)
US and Canadian rig counts log increases
Drilling activity rose in both the US and Canada last week, according to the latest data release from Baker Hughes. US rig activity increased to a six-week high but remains near multi-year lows. Canadian counts continue to improve, now at a 20-week high.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/fist.png)
Steel industry groups urge House action on LTPF 2.0
Six steel industry organizations have urged House Speaker Mike Johnson to include the Leveling the Playing Field 2.0 Act in any proposed package of legislation against China’s "unfair" trade practices.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/07/CRU-Logo-2023-07-21-at-4.35.41-PM.png)
CRU: Poor steel margins continue to push down raw material prices
Both iron ore and coking coal prices fell this week because of resistance from buyers. Iron ore prices have continued to fall throughout the past week, following sharp declines in steel prices in China, given no new policy announcement from the ‘Third Plenum’ meeting.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/gears.png)
Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Premium1.png)
Steelmaking raw material prices ease in July
The majority of steelmaking raw material prices declined in June, following the same trend seen in May, according to SMU’s latest analysis.