SMU's Week in Review: June 9-13

“We have a golden share, which I control, or the president controls,” Trump said in remarks to reporters at the White House. “Now I’m a little concerned who that president might be (someday), but that gives you total control. It’s 51% ownership by Americans.”

On Friday, the White House OK’d the $14-billion transaction.

Market happenings

General Motors plans to invest about $4 billion over the next two years at its US manufacturing plants. The investment will allow GM to make more than 2 million vehicles, both gas and electric, per year in the US. This announcement follows a recently disclosed plan to invest $888 million in the Tonawanda Propulsion plant near Buffalo, N.Y.

ArcelorMittal Long Products Canada is shifting production from its wire-drawing facility in Hamilton, Ontario, to its Montreal, Quebec, operation as part of a restructuring plan. CBC reports that ArcelorMittal pinned blame for the restructuring on steel imports, and Local 5328 President Mike Hnatjuk said he believes US tariffs contributed to management’s decision.

Speaking of tariffs, subdued demand is causing importers to cancel hot-rolled (HR) coil orders and renegotiate the terms of shipments enroute to the US.

An executive for a large overseas mill said customers might find it difficult to justify imports after Trump doubled the 25% Section 232 tariff on imported steel and aluminum to 50%.

As for imports, do we still need them?

Speaking on an SMU Community Chat Wednesday, Timna Tanners, managing director at Wolfe Research laid out a case for why the US might soon no longer need imported flat-rolled steel, thanks to a wave of domestic capacity additions over the last few years.

“Conceptually, we’re one new mill away from being self-sufficient,” she stated.

Seven years after the company’s founding, Reibus International will close its online metals marketplace. However, the Atlanta-based company will continue to operate the logistics business.

“As Reibus continues to evolve, we’ve made the decision to close our metals sales division and focus our energy and innovation on growing Reibus Logistics,” the company said.

Scrap and pig iron

June scrap prices in the US have settled sideways. And one source expects the market to stay flat in July, barring a significant increase in steel production. Of course, tariffs were part of the story.

“I think the great majority of tons would have traded sideways anyways, but the tariff announcement did help to push one or two mills into the sideways camp.”

Meanwhile, the Brazilian pig iron trade was waiting on the scrap market to settle. A confirmed a sale was made to the US at a price of $401/mt FOB Vitoria. The freight is reported at $30/mt, which equates to $431/mt CFR US port. That’s a drop of ~$10/mt from their last sale. However, not all producing channels have accepted this price reduction.

Prices and surveys

Steel prices climbed for a second straight week across all five sheet and plate products tracked by SMU. The market appears to be inching higher in response to Trump’s 50% tariff announcement, though gains are not nearly as strong as the surge seen back in February following the initial tariff news. You can get the numbers here.

And the price spread between hot-rolled coil and prime scrap widened slightly in June after narrowing for the two previous months. We have the numbers.

Domestic hot-rolled coil prices edged up marginally again this week, while offshore prices ticked down. Despite this trend, US prices remain at a notable discount to EU imports after the Trump administration doubled Section 232 tariffs. Get the data here.

Economic highlights

Monday, June 16: Empire State manufacturing survey (8:30 a.m.)

Tuesday, June 17: Industrial production (9:15 a.m.)

Wednesday, June 18: Housing starts, building permits, initial jobless claims (8:30 a.m.); FOMC interest rate decision (2 p.m.), Federal Reserve Chair Jerome Powell press conference (2:30 p.m.)

Friday, June 20: US leading economic indicators (10 a.m.)