What do 525 steel and manufacturing executives have in common? They will all be at our 7th SMU Steel Summit Conference in Atlanta on August 28, 29 and 30.

As of Friday, July 21, SMU has received registrations from 525 decision makers representing 241 different companies. All will gather at the Georgia International Convention Center (www.GICC.com) to enjoy dozens of high-quality speakers, great exhibitors and sponsors, and networking with one another. The SMU Steel Summit Conference is the fastest growing steel conference in the industry.

Last week, Steel Market Update (SMU) completed our mid-July flat rolled market trends analysis. We invited 650 steel executives to participate. Of those responding, 48 percent were service centers, 41 percent were manufacturing companies, and 8 percent were trading companies, with steel mills and toll processors accounting for 4 percent each.

One of the questions asked was, “Do you think the U.S. government should penalize countries that have a high rate of exports to the U.S. in the name of national security?”

About 30 percent of the respondents said yes, while the majority, 70 percent, replied no.

Data from July 7, 2017, shows the U.S. rig count for the week was 950 rigs exploring for or developing oil or natural gas, reports oilfield services company Baker Hughes, Inc. This is down 2 rigs compared to last week, with oil rigs down 1 to 764 rigs, gas down 1 to 186 rigs, and miscellaneous rigs unchanged at 0 rigs. Compared to this time last year, the 950 count is up 488 rigs, with oil rigs up 393, gas rigs up 98, and miscellaneous rigs down 3.

The week ending July 21 was another mixed week for flat rolled steel and plate prices. Steel Market Update (SMU) steel price indices saw two products as being higher, two lower and one unchanged. Platts had two higher and one lower. SteelBenchmarker did not report prices this week as they only report twice per month.

Benchmark hot rolled averages remained the same at $610 per ton, according to the SMU index, while Platts had the product up $2.50 per ton to $617.50 per ton.

The steel market is waiting anxiously to see if the Trump administration places additional tariffs or quotas on steel imports. Opponents of the proposed Section 232 trade action say it will be bad for the U.S. economy, in particular U.S. manufacturers that will have to pay more for raw materials, making them less competitive versus foreign rivals. That appears to be the consensus view of respondents to Steel Market Update’s latest survey of mills, service centers, toll processors and trading companies.

Imposing additional duties on steel imports will place an even higher price burden on U.S. manufacturers, agreed 87 percent of respondents to SMU’s July 17 flat rolled steel market trends survey. Only 13 percent indicated they feel the duties would not overburden manufacturers.

On Wednesday, Nucor became the first flat rolled mill east of the Rockies to increase spot prices on hot rolled, HRP&O, cold rolled and galvanized steels. Nucor Sheet Mill Group sent out a letter to their customers advising that effective immediately they were taking pricing up by a minimum of $25 per ton ($1.25/cwt).

Steel Dynamics, Inc., is excited about the second half and is expecting growth in all sectors through 2018. CEO Mark Millett says the flat rolled arena remains very strong despite a slight turning of the automotive market. Infrastructure is continuing to grow, as evidenced by cranes and road work funded by states, if not federal coffers. Energy and construction are improving.

Order rates for SDI are solid with lead times 3-4 weeks for hot rolled coil and 5-6 weeks for value-added products. The Nucor $25 per ton price increase is likely to stick, said Millet, and be followed by others in the industry.

The U.S. Department of Commerce (DOC) released new foreign steel import license data on July 18. The trend for July is for steel imports to remain quite high, in the mid 3-million-net-ton range. We expect imports to be lower than June’s 3.9 million net tons, but above the 12-month and 3-month moving averages.

Finished steel imports (removing slabs/billets from the data) are anticipated to reach 3.0 million net tons.

Flat rolled lead times remain flat compared to what we reported for early July, as well as one month ago.

Twice per month, Steel Market Update conducts an analysis of the flat rolled sheet and plate markets. This is done through the use of a comprehensive questionnaire focused on manufacturing companies and service centers, which combined account for 86 percent of the total responses received. However, when looking at lead times, we restrict the responses to only manufacturers and distributors. We do not invite steel mills, trading companies and toll processors to participate in our lead time questions.

The lead times we reference below come through our survey process and are an average of the responses seen. For exact lead times from any specific mills, contact your local representatives.

Despite the risks associated with Section 232 and the belief that flat rolled steel prices will rise prior to and immediately after the announcement of a Section 232 decision, mills appear somewhat more open to price discussions. Based on the responses received this week from our flat rolled market trends questionnaire, buyers and sellers of steel were reporting the domestic mills as being more active than what was measured at the beginning of the month.

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:

Steel Market Update (SMU) asked trade attorney Lewis Leibowitz to update us on the status of the antidumping (AD) and countervailing duties (CVD) annual reviews. We were told that at the beginning of each month, the U.S. Department of Commerce publishes a notice of orders that are eligible for requests for administrative reviews. The notice for July was published on the 3rd and CORE (corrosion resistant) and Cold Rolled orders were on the list.

Here is a list of the flat rolled steel orders with the anniversary month being July:

Phil Bell is a brave man. The president of the Washington-based Steel Manufacturers Association (SMA) has volunteered to serve on a trade panel during Steel Market Update's Steel Summit Conference next month in Atlanta. He knows full well that his fellow panelists—a trade lawyer, a manufacturers’ advocate and a spokesman for a libertarian think tank—will undoubtedly challenge his views on trade and Section 232. But they are views he believes in.

Nucor CEO John Ferriola said that in the current challenging environment, he is encouraged by second-quarter results, but not satisfied.

Illegally traded imports continue to be a problem in the United States for Nucor and the domestic steel industry, Ferriola said during the company's second-quarter conference call. He cited a 15 percent year-over-year increase in finished steel imports during the first half of 2017. Imports claimed 29 percent of market share in June 2017, the same as the record annual levels set in 2015. Year-to-date import market share is at 27 percent. "Further evidence," he said, "that traditional trade cases are very often too slow to keep up with the shifting tactics of nations that are abusing the rules of trade."

Trade talks with China this week ended in a stalemate after the U.S. pressed for "more fair" trade terms. The discussions were described as "a frank exchange" but little if any agreement was reached on bilateral trade and economic issues, according to a senior U.S. official. A press conference following the meeting was canceled and no joint statement was issued.

Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin said, "China acknowledged our shared objective to reduce the trade deficit, which both sides will work cooperatively to achieve."

Kloeckner Metals is investing $11.3 million to expand its Greenville, S.C., operations. The expansion will add 50,000 square feet to the facility to house a new high-speed slitting line capable of processing aluminum and advanced high-strength steel. The company plans to begin operating the new line by Sept. 1.

United Steelworkers International President Leo Gerard says the Trump administration's objectives for NAFTA don't go far enough.

In a statement following publication of the objectives by the U.S. Trade Representative, Gerard said that although the USW has long supported renegotiation of NAFTA, protection for workers in the U.S., Canada, and Mexico has been supplanted by corporate interests.

Housing starts in June jumped 8.3 percent to a seasonally adjusted annual rate of 1,215,000 and were 2.1 percent higher than in June 2016, said the Department of Commerce on Wednesday. The increase follows three months of decline and was driven by new construction in the Northeast and Midwest.

This is an over-whelming time to be involved with the steel industry. We have the steel mills announcing price increases at a time when prices normally are flat to lower (they have been running flat to mixed over the past few weeks). The market anxiety is at high ebb as steel buyers and sellers wait for a decision to be made on Section 232. SMU has seen reports that the announcement could come in a speech in Youngstown next week. Other reports are saying it could be as late as Labor Day (right around the time of our conference).

Many of the buyers SMU spoke with today felt the increases were nothing more than trying to keep the market from slipping further. We were told that if Section 232 does not come out next week and instead waits until the end of August or early September mill prices could weaken.

As the steel industry waits for clarity on Section 232 we got another week where flat rolled steel prices came in with mixed results. We saw some of the items indexed have their averages rise while others fell. In reality it doesn't appear that there is a lot pushing prices in one direction or another at this point in time.

Shipments of all steel products by U.S. distributors in June totaled 3,423,500 tons, up 1.1 percent from June 2016, reported the Metals Service Center Institute (MSCI). The 155,600 tons per day shipment rate in June was 300 tons per day lower than in the month of May. Both May and June had 22 shipping days.

Inventories of all steel products being held at steel distributors in the United States totaled 7,262,200 tons at the end of June. Steel inventories ended the month almost exactly the same as the month of May, which came in at 7,242,300 tons. The number of months supply remains at 2.1 months, MSCI reported.

Graphite electrodes used in electric arc furnaces are short in supply, causing concerns for EAF and ladle metallurgy (LMF) steel mills. Electrode manufacturers have reduced capacity in the past several years by an estimated 200,000 metric tons annually, according to some sources.

China electrode producers had priced other companies out of the market by offering prices that were much lower than their competitors. Competing producers needed to charge two to three times more for ladle furnace electrodes versus EAF in order to keep margins up. As the Chinese government cracked down on emissions and capacity, less furnaces were in the market for electrodes, resulting in China capacity falling to around 50 percent, reported Platts. With abundance of low priced scrap and closure of induction furnaces, capacity is currently improving in China.

U.S. raw steel production hit 1,763,000 net tons in the week ending July 15, up 1.7 percent from the previous week and up 5.8 percent from the same week last year. Mill capacity utilization for the July 15 week averaged 75.6 percent, up from 74.3 percent the prior week and 71.3 percent the prior year.

Like the rest of the steel market, wholesalers of galvanized steel and other products used in HVAC applications are stuck in an uncomfortable wait-and-see mode as the Section 232 drama plays out in Washington.

In the monthly steel conference call hosted today by the Heating, Air-conditioning, and Refrigeration Distributors International, HARDI members reported anxiety over possible trade action and its potential effect on steel prices, inventories and availability. “Everyone is waiting for Section 232 to be lifted off their shoulders,” said one participant in the call.

We’re in for a good year ahead, says popular economist Alan Beaulieu of ITR Economics, who will be a keynote speaker during Steel Market Update’s 2017 Steel Summit Aug. 28-30 at the Georgia International Convention Center in Atlanta.

Previewing his remarks, ITR forecasts another six months of accelerating economic expansion for the U.S., followed by six more months of somewhat slower growth. “Use your rates-of-change and leading indicators to determine when your specific business will be impacted, and move forward with confidence knowing what is coming,” he recommends.

Steel shipments by Canadian service centers in June totaled 392,600 net tons, down 5.4 percent from the previous month, but up 5.0 percent from June 2016, reports the Metals Service Center Institute (MSCI). On a daily basis, total shipments were 17,800 tons per day in June (a 22-day month), down from 18,900 tons per day in May (also a 22-day month), but up compared to a year ago when they were 17,000 tons per day (in a 22-day month). Total steel inventories at the end of the month were 1,138,600 tons, up 2.6 percent from last month and up 1.6 percent from this time last year.

The following is excerpted from an article written in February 2014 by SMU Publisher John Packard and supply chain consultant Mario Briccetti of Briccetti Associates.

Buyers and sellers of steel are often exposed to ethical questions in their everyday activities. Some of the issues that arise are fairly easy to discern as ethical or unethical, while others reside in a much tougher-to-distinguish gray area.

The saga of Essar Steel Algoma is continuing with a new wrinkle in its attempt to emerge from insolvency protection.

The company was granted an extension to its debtor-in-possession financing on Monday, pushing the maturity date to March 21, 2018. USW Local 2724, which represents the salaried employees at Algoma, now wants MAGA Steel Corp to be allowed to bid against the DIP lenders for acquisition of the company. Algoma has pressed to finish negotiations with the lenders and close a transaction by September.

President Trump kicked off “Made in America Week” on Monday with a display of items from 50 states that were made in the U.S.A. The photo-op event immediately garnered criticism of the Trump family businesses that rely heavily on China and other Asian countries to manufacture their goods.

The NAFTA renegotiation objectives were released concurrently on Monday by the U.S. Trade Representative. The objectives include increasing opportunities for U.S. firms to sell U.S. products and services into NAFTA countries. A renegotiation would also keep in place domestic preferential government purchasing programs such as “Buy America” that would prevent Canada and Mexico from bidding on U.S. government contracts. The U.S seeks to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.”

The Empire State Manufacturing Index fell 10 points to 9.8 in July, after hitting a two-year high in June. New orders and shipments continued to grow but at a slower pace in New York State, dropping 4.8 points and 11.8 points, respectively.

Delivery times were reported as longer in the July survey and inventory levels were fairly steady. The indexes for prices paid and received were relatively unchanged. The index for unfilled orders fell 9.3 points to -4.7. The employment index dipped for the third month but remained positive at 3.9, indicating a slower expanding workforce.

As the Tuesday work day was coming to a close we want our readers to know that there is a meeting going on in the White House with a number of steel mill CEO's, members of the WH staff and Wilbur Ross. According to World Trade Online the subject being discussed is Section 232... SMU will watch closely for reports on the meeting as they become known. However, our readers need to be aware that we may well be within a day or two of learning more about the recommendations that will be made by the U.S. Department of Commerce.

Our 2016 SMU Steel Summit Conference welcomed 434 attendees to Atlanta. That was approximately 100 more attendees than what we saw in 2015. With 40 days to go before the beginning of the 2017 conference registrations just passed 520 executives and we are bearing down on 534 which would break the 2016 record by 100 attendees. I want to thank everyone who has been telling their suppliers, customers or steel friends about our conference.

Don’t get me wrong, I would love to become the largest steel conference in North America and we are not that far behind the folks in New York City. So, you can continue to tell your friends in the industry that the place to go at the end of August is the Georgia International Convention Center located right next to the Atlanta International Airport (ATL). They can come join us for three days of networking, learning and obtaining a better understanding of what the future should hold for our businesses. We do this using the highest quality speakers in a forum that promotes dialogue. More information can be found on our website.

Flat rolled prices were mixed this past week. Early last week we were collecting information from steel buyers who were advising Steel Market Update that steel mill lead times were short and there were still holes in the order books at many of the domestic mills. As the week progressed we found, especially after the Trump comments on tariffs and quotas, the mills as being more committed to keeping prices firm.

Benchmark hot rolled had a very narrow range on the three indices followed by SMU who all reported last week. SMU had our index average as unchanged at $610 per ton ($30.50/cwt) while Platts took their numbers up twice during the week and ending at $615 per ton. SteelBenchmarker reported hot rolled steel prices last week as they do only twice during the month. The SteelBenchmarker HRC average was up $3 per ton to $610 per ton.

What should the administration consider when evaluating the potential use of Section 232 to restrict steel imports? The U.S. Chamber of Commerce, which serves as a voice for business interests in Washington and represents more than three million businesses of varying size, sector and region, offered five questions that should be answered:

The very first Steel Market Update Steel 101: Introduction to Steel Making & Market Fundamentals workshop did not include a mill tour. It was held in Houston and, even though the class was interesting and educational, a few of the attendees told us how much better it would have been if they could have toured a working steel mill. We listen to our attendees. The next Steel 101 workshop was in Chicago and included a tour of the NLMK Portage minimill. On October 4-5, 2017, we will conduct our 23rd Steel 101 workshop in Fort Wayne, Indiana, and our friends at Steel Dynamics Inc. (SDI) are allowing our group to tour their Butler mill to help us reinforce the steelmaking and rolling process.

Is today’s contentious and acrimonious political climate having a negative effect on American business? Is the win-at-any-cost attitude in politics, so evident in everyday news reports, eroding ethical business practices in steel and other industries? Is it OK to bend the truth or to make up “fake news” to damage your competition?

The desire to do whatever it takes to be successful in business is nothing new. (Case in point: Gordon Gekko, who proclaimed “Greed is Good” in the ’80s depiction of Wall Street.) But there’s a thin line between success and unethical behavior, and it’s hard to determine if it’s moving in a positive or negative direction.

Since our last report, the price of crude oil has continued to decline and the price of natural gas has been stable. The number of operating rigs exploring for both oil and gas has continued to increase. The prices of oil and natural gas drive the consumption of energy-related steel products including oil country tubular goods, pipe fittings and well head equipment, among others. A significant volume of hot rolled coil is used to make welded tubular goods.

Below is the latest data released by the the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) regarding residential and commercial heating and cooling equipment shipments through May 2017. You may read the press release on their website here.

The 2017 SMU Steel Summit Conference Events App is now available for all attendees, sponsors and exhibitors to download and use. The App is where you find all the most up-to-date information about the conference, what you work from to network with other attendees, and what you will use to get the speaker presentations after the conference is over. To get the most out of the SMU Steel Summit Conference experience, you will want to download and use the SMU Events App.

Welcome to the mobile era. When you attend Steel Market Update events, you can be armed with a tablet or smartphone and have a much better, and more productive, conference experience. Everything is at your fingertips: a detailed conference agenda, list of speakers with biographical information, a complete list of the attendees, sponsors and exhibitors, and more. You can take notes as you go and, importantly, you can connect, engage and follow up with other attendees in ways you have not been able to do in the past. You can search through the attendee list and find those you would like to contact, send an email to meet later or forward company information with ease. And, with The Steel Market Update App, social media is integrated, as well. You can tweet or post to Facebook or LinkedIn during the event without leaving the App, interacting with others quickly and efficiently.

We continue to develop new and better ways to simplify and enhance your conference experience.

Each year, more and more of our attendees use the SMU App. At the 2016 SMU Steel Summit Conference, 80 percent of the attendees downloaded the App. Last year, the most popular features were the ability to access others attending the conference and viewing the agenda. We also found more people accessing the speaker PowerPoint presentations through the App. During the conference, we used the polling feature for the first time. That’s when we discovered twice as many of our attendees supported Donald Trump than Hillary Clinton. Our attendees got some early insight on who would be the next president months before the election.

I am working on an article regarding foreign steel offers, which have almost dried up completely due to the threats/unknowns associated with the Section 232 investigation. There have been a number of months where foreign steel imports have exceeded 3.5 million tons. We are hearing that these months will soon be behind us - although my gut tells me it might be October before we see any radical change in the numbers. The U.S. Department of Commerce will release new import license data on Tuesday evening. We will be on top of the numbers as we work to better understand both the short- and long-term consequences associated with change and with uncertainty.

U.S. Department of Commerce (DOC) Secretary Wilbur Ross told the Senate Finance Committee today that the long-awaited Section 232 report on steel would be given to President Trump within a week. Ross told the Senators that the report would contain a “menu of options” on how to contain steel imports.

In an article published by World Trade Online earlier this evening, Senator Ron Wyden (D-OR) told reporters he sensed "they’re not yet there" on the report. He went on to say that the DOC should seek an “enduring solution,” and that in his view Section 232 is not the way to go.

Wyden told reporters that Ross “feels confident that his approach is going to make all sides happy in the steel industry,” but he added, “He has a big mountain to climb.”

The controversial Section 232 tariffs/quota expected to be proposed by the Trump administration against foreign steel imports elicited many strong opinions from respondents to SMU’s July 5 flat rolled steel market trends survey. Only 22 percent said they feel duties of 20 percent or more on foreign sources of supply would be good for their business. About 44 percent believe it would be bad for business, while another 34 percent feel it would have no impact. Sixty-three percent of respondents believe that if President Trump places restrictive duties on steel imports, there could be a shortage of supply in the U.S. market.

The Metals Service Center Institute (MSCI) will release its service center inventories and shipment data next week. As we prepare to review their data, we thought our readers would be interested in what we collected about flat rolled steel inventories at distributors during our flat rolled steel market trends analysis last week.

Flat rolled steel service center inventories now average 2.32 months' supply based on a three-month moving average. As a single data point, distributors advised SMU during the survey process that their inventories were down to 2.28 months.

A group of the nation’s most distinguished economists and former presidential economic advisors, including Ben Bernanke and Alan Greenspan, has sent President Trump a letter urging him not to pursue further tariffs on steel imports under Section 232.

The following article on the hot rolled coil (HRC) futures markets was written by David Feldstein. As the Flack Global Metals director of risk management, Dave is an active participant in the hot rolled futures market, and we believe he provides insightful commentary and trading ideas to our readers. Besides writing futures articles for Steel Market Update, Dave produces articles that our readers may find interesting under the heading "The Feldstein" on the Flack Global Metals website www.FlackGlobalMetals.com.

The agriculture industry challenged the use of national security as a reason to limit steel and aluminum imports, in a missive to Secretary of Commerce Wilbur Ross on Monday. A letter from 18 agricultural associations urged the administration to consider the consequences trade barriers may have on the food industry.

“Many countries that export steel to the United States are also large importers of U.S. agriculture products. The potential for retaliation from these trading partners is very real,” said the associations.

Autoworkers in the U.S. and Canada say any renegotiation of the North American Free Trade Agreement must lead to higher wages for all three countries, reverse trade deficits with Mexico, and create new manufacturing jobs in the U.S. and Canada.

In a joint statement, the United Autoworkers and Canadian association UNIFOR noted that the trade deficit for motor vehicles and parts between 1993 and 2016 has grown dramatically with Mexico. The overall automotive trade deficit for the U.S. rocketed from 3.5 billion to $45.1 billion during the period, while the deficit for Canada with Mexico jumped from $1.6 billion to $8.7 billion.

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel import prices (delivered to USA ports) and domestic (USA) hot rolled coil prices (FOB Domestic mills). We want our readers to be aware that this is only a "theoretical" calculation as freight costs, trader margin and other costs can fluctuate, ultimately influencing the true market spread.

Our primary numbers for this analysis are from Platts as we compare European HRC export pricing (FOB Ruhr), Turkey HRC export pricing (FOB Turkey) and Chinese HRC export pricing (FOB Chinese port). Be aware that Chinese hot rolled pricing is not available to the U.S. market, so the Chinese spread is nothing more than an exercise in "what if." SteelBenchmarker is the secondary data provider of foreign hot rolled coil prices and is noted further down in this article.

The U.S. Department of Commerce (DOC) released license data for the month of June as well as the first 11 days of July. The bottom line is imports of foreign steel into the U.S. continue to be worrisome (to the domestic steel mills) and the early trend is for July 2017 to be another three million plus ton month.

The United States has called for a special meeting with South Korean trade officials to discuss modifying the U.S.-Korea Free Trade Agreement (KORUS). In a July 12 letter to the Korean trade minister, U.S. Trade Representative Robert Lighthizer requested a special session in Washington to address problems with the agreement, including market access in Korea for U.S. exports and the significant trade imbalance between the two nations.

This commentary by Daniel Pearson appeared in the June 2017 issue of The Conservative and is reprinted with permission. Daniel Pearson is with the Cato Institute where he is a trade specialist. Mr. Pearson is also the former chairman of the International Trade Commission (ITC). He will be one of our speakers at this year's SMU Steel Summit Conference at the end of August.

Donald Trump has repeatedly emphasized his preference for “fair trade” while casting doubt on the desirability of “free trade.” In his address to a joint session of Congress on 27 February, the president said: “I believe strongly in free trade, but it also has to be fair trade. It’s been a long time since we had fair trade.”

This may be news to the White House, but the world has never experienced a trading environment that has been entirely fair. What’s more, a country doesn’t need to worry about what other nations are doing in order to experience free trade - all it has to do is keep its borders open to imports.

The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States remained positive this week for the second consecutive week, following a 10-week streak of being in negative territory. MoMo is a trailing indicator and shows the relationship between the current U.S. hot rolled coil price movements against the previous 12-week average price as a percentage. A positive MoMo index indicates hot rolled steel prices are moving in an upward direction compared to the previous 12-week period, while a negative index number indicates a downward direction in prices.

MoMo should not be confused with the SMU Price Momentum Indicator, which is a forward looking indicator. The SMU Price Momentum Indicator is currently at Higher indicating that steel prices are expected to increase over the next 30 days.

What was it - Tuesday that I said I thought the Section 232 results would be much less than what the steel mills thought a few weeks back? Last night on Air Force One President Trump spoke about considering quotas and tariffs on steel imports into the U.S. According to excerpts of his conversation with reporters, Trump said, "There are two ways - quotas and tariffs. Maybe I'll do both." He continued with, "Not only China, but others. We're like a dumping ground [for steel], okay? They're dumping steel and destroying our steel industry, they've been doing it for decades, and I'm stopping it. It'll stop."

The market has become "quiet" over the past week and our sources (steel buyers) are providing mixed messages, which is showing up especially in our galvanized index whose average was down $25 per ton today. The GI number was impacted by cheap pricing being reported on commodity grade galvanized with one GI buyer telling us, "We have seen very little movement since the price increases around 6/6/17. The mills are still willing to negotiate in an effort to fill their books. You do not have to work very hard to get a number under $38 base." Others have reported higher prices, but for minimal tonnage.

Hot rolled has been one of the stronger items we have seen over the past few weeks. There is a narrow range for HRC at $600-$620 per ton.

As the week goes on, Steel Market Update will be re-evaluating our Price Momentum Indicator, which is currently pointing toward higher prices on the back of the expected Section 232 ruling. That appears to be up in the air now, and a non-ruling is not a positive for steel prices over the next 30 to 60 days.

John Packard, Publisher, Steel Market Update

Today I spent a good portion of my time wandering around the United States and Canada soliciting information about flat rolled steel pricing, lead times, Section 232 and anything else steel buyers wanted to talk about. I thought the quote of the day was from a manufacturing company who told me, “If you know where to look, you can find what you need but, you have to need and you have to look.”

This same buyer also told me, “Your article today on the G20 and its effect on delaying outcome of 232 was spot on. Canada and Australia have both now secured exemptions...so, cracks in the foundation are starting to show. James Mattis [Department of Defense] has announced his own parallel study [on steel], so that can’t be a good thing for supporting the Department of Commerce.”

Rising steel prices, some in anticipation of Section 232 trade action, are blurring the line between prime and secondary steel, report service center executives familiar with secondary steel products.

Grand Steel Products, Wixom, Mich., sells both prime steel and secondary—material that did not meet the specifications of its initial customer but is still suitable for other applications. Jim Barnett, president of Grand Steel, said rising prices have tightened up the secondary market as the differential between the price of prime and secondary has narrowed considerably.

U.S. steel mills managed to export just over one million net tons in May, according to just-released data by the U.S. Department of Commerce. Exports increased by 150,000 tons over April 2017 and were 203,000 tons greater than what was exported during May 2016. May 2017 is the first month to exceed one million tons since October 2014.

Editor’s note: The opinions expressed here are those of trade attorney Lewis Leibowitz and do not necessarily reflect those of Steel Market Update. There will be more discussion about trade, trade suits and Section 232 in our upcoming SMU Steel Summit Conference, which will include presentations by Leibowitz and others on both sides of the trade debate.

Steel is in the forefront of foreign and economic policy once again. The country awaits a decision from the president about restricting steel imports into the United States to protect domestic steel producers. The decision, expected before now, has been delayed in part at least because of controversy within the administration about whether import restrictions would do more harm than good.

Essar Steel Algoma, rebranded as Algoma, is requesting a fourth extension to its financing as it continues toward emergence from bankruptcy protection. The last Debtor In Possession extension was denied by the court due to concerns that the financing would not cover the winter material build-up and could provide too much transaction leverage for the DIP lenders. The DIP agreement expired April 30 and an extension was requested to Aug. 31 with a conditional further 30-day extension.

Domestic raw steel production was 1,733,000 net tons in the week ending July 8, up 0.9 percent from the previous week and 4.0 percent from the same week in 2016, reports the American Iron and Steel Institute (AISI) in Washington. Mill capacity utilization in the July 8 week was 74.3 percent, up from 73.6 percent in the prior week and 71.3 percent in the prior year.

Australian steel and aluminum manufacturers were relieved to hear that Australia will be exempt from any U.S. import tariffs imposed under Section 232.

Prime Minister Malcolm Turnbull and Finance Minister Mathias Cormann lobbied U.S. officials at the G20 meetings arguing that Australia was a strong ally and exports relatively little of its steel and aluminum to the United States. Turnbull and Cormann left the meetings confident that their concerns were understood by Trump and his team and that Australia would be exempted from any U.S. tariff actions, reported the Guardian Australia.

The European steel market and economy improved in the first half of 2017, but the EU is concerned that increasing protectionist policies may lead to “disastrous trade flow distortions.”

Apparent steel consumption grew 3.1 percent year-over-year in the European Union during the first quarter of 2017, according to a new report by the European Steel Association (EUROFER). Improved supply and demand balance was driven primarily by a reduction in dumped imports as a result of successful trade cases.

U.S. bourbon exports are on the table for a retaliatory tax should Section 232 cut off EU steel exports. Bourbon, made almost exclusively in Kentucky, accounted for 20 percent of the $654 million of U.S. spirits sold to the European Union in 2016, according to a recent article in The Guardian.

The Dodge Momentum Index continued to exhibit strength in June, climbing 1.1 percent to 141.1. The monthly measure of nonresidential construction projects in planning was driven by a 4.8 percent jump in planning for institutional construction. The commercial component of the index dipped 1.3 percent, but was 11.8 percent higher than in June 2016. Institutional planning gained 9.5 percent from its year-ago score. The components of the index have been trading off almost monthly as drivers of growth since the index began its upward trend in mid-2016.

On Monday, our registrations for the Aug. 28-30 SMU Steel Summit Conference surpassed 500 steel and manufacturing executives. We expect to beat last year’s attendance record by 100 attendees as the SMU Steel Summit Conference continues to be the fastest growing steel conference in North America. There are now 47 days to go...

Earlier today, I got a request from one of our readers looking for articles about Section 232 as they wanted to do an article on the subject for their customers. In responding to their inquiry, I performed two searches using the search box in the top righthand corner of our website. (I usually log in to my account first in case the articles retrieved are member-only access articles). Since the subject was Section 232, I used that as my first search and quite a few articles popped up. I also did a search using Lewis Leibowitz in the search box, since I knew that Lewis has been quoted and has written quite a bit on the subject for SMU. Whenever you are looking for an article on a specific subject, try out our search box as you may be surprised by how much you are able to find on the topic. Of course, you are always welcome to ask us a question by using the info@SteelMarketUpdate.com email address.

The G20 Summit concluded Friday with some concessions made by members on trade, but still no deadline for the looming Section 232 steel investigation results.

Pressure from the United States resulted in the G20 joint statement including a more strongly worded pledge for members to “fulfill their commitments on enhancing [steel] information sharing and cooperation by August 2017, and to rapidly develop concrete policy solutions that reduce steel excess capacity.”

As expected, ferrous scrap prices traded sideways (July delivery to be the same as June) in most markets. Of course, having just said that, we do need to point out that the steel mills sourcing scrap from the East Coast had to pay $10 per gross ton more in order to keep scrap from moving to the export markets. Our sources also advised that prime scrap continues to be tight in the Great Lakes, where prices went up by $10 per gross ton. Even so, Pete Myers of Metalico told SMU, “Note, even with these increases price levels in the Great Lakes and Chicago still remain well below regions to the east and south.”

Myers went on to say, “With mills returning to normal demand in August and strong export sales through 8/31, participants are bullish for next month.”

Flat roll lead times have remained within a narrow range over the past six months, according to the manufacturing companies and steel service centers responding to our flat rolled market trends analysis last week.

Hot rolled lead times now average 4.41 weeks, which is the same as what we reported in mid-June, but still one-half week better than what we measured in early June just as the steel mills began announcing a new round of price increases. One year ago, HRC lead times were reported as averaging 4 weeks (4.07).

We saw steel mill lead times as being essentially the same to slightly higher than what we measured at the time of the last price increase announcements (week of June 5th). When the announcements were made, most steel mills were actively trying to collect increases. We saw the bottom of our price range rise, and steel price averages have slowly risen with hot rolled coil now topping $600 per ton (average). Those responding to last week’s flat rolled steel market trends survey reported a weakening in the negotiation positions on hot rolled and Galvalume and strengthening of their resolve on cold rolled and galvanized.

Flat rolled steel prices were mixed with SMU seeing increases in hot rolled, cold rolled, galvanized (.060" G90) and Galvalume. SMU took plate prices down $15 per ton. Platts saw prices as stable on all but cold rolled, which they saw down $5 per ton compared to the prior week. We had a shortened week to review pricing due to the Independence Day Holiday in the United States and Dominion Holiday in Canada.

Each and every day the work load gets more difficult as we prepare for more than 500 executives to arrive in Atlanta for our 7th SMU Steel Summit Conference. We will kick off the event on Monday, Aug. 28, with registration/check-in beginning at noon and the first of our two “Pre-Summit” programs beginning at 2 PM.

Our first Pre-Summit Program will feature trade attorney Lewis Leibowitz and Cato Institute Trade Specialist and former ITC Chairman Daniel Pearson. They will spend the better part of an hour discussing the various trade suits and remedies and explain the differences between a Section 337, Section 323, Section 201, Circumvention and the more traditional Antidumping (AD) and Countervailing Duties (CVD), which will be either under review or soon to be under their annual review for CORE (corrosion resistant), cold rolled and hot rolled steels.

At 3 PM, Applied Value will conduct a second Pre-Summit Program entitled, “Fact-Based Steel Negotiations: Gross Margin Alignment, Lining Up Cost and Sales, Mitigate Risks with a Risk Strategy and Reduce Volatility for Your Company.” Ryan Huff, associate partner of Applied Value, will conduct the program.

The U.S. employment situation continues to be good. Net job creation in June, including revisions for April and May, was 269,000, and the latest number of job openings was the highest on record.

The Bureau of Labor Statistics (BLS) net job creation report released on Friday exceeded economists' expectations and was another example of why we should not be fixated on a single month’s result. On the face of it, March was terrible at only 50,000 more people employed than in February. In the data released on Friday, April was revised up by 33,000 to 207,000 and May was revised up by 14,000 to 152,000. The preliminary June result was 222,000 jobs created. Clearly the single month number is useless in its ability to measure the trend. The average monthly increase in the 12 months of July 2016 through June of 2017 was 187,000. Coincidentally, private employment increased 187,000 in June and government gained 35,000. The unemployment rate increased from 4.3 percent in May, which was the lowest since February 2001, to 4.4 percent in June.

Total raw steel production for the month of May was 7,606,893 net tons, with 5,168,112 tons produced by electric arc furnaces (EAF) and 2,438,781 tons produced by blast furnaces. May raw steel production was 231,724 tons or 3.1 percent higher than the previous month, but 86,653 tons or 1.1 percent lower than the same month last year, reports the American Iron and Steel Institute (AISI) in Washington. AISI's monthly estimates are different than the weekly estimates we report, in that the monthly estimates are based on over 75 percent of the domestic mills reporting versus only 50 percent reporting for the weekly estimates.

The administrative law judge presiding over U.S. Steel’s Section 337 case against Chinese steelmakers has extended the deadline for fact discovery by three weeks. The close of discovery is now set for July 15, pushing back the evidentiary hearing from September to mid-October.

Data from July 7, 2017, shows the U.S. rig count for the week was 952 rigs exploring for or developing oil or natural gas. The last time U.S. rig counts were this high was in early 2015, reports oilfield services company Baker Hughes Inc.

This is up 12 rigs compared to last week, with oil rigs up 7 to 763 rigs, gas up 5 to 189 rigs, and miscellaneous rigs unchanged at 0 rigs. Compared to this time last year, the 952 count is up 512 rigs, with oil rigs up 412, gas rigs up 101, and miscellaneous rigs down 1.

The question steel buyers are going to be asking themselves as this week begins is, will the Trump administration finally announce their findings on Section 232 and will this announcement allow President Trump to move on the duties or quotas expected by the domestic steel mills and many steel buyers?

The question I am asking myself is, what effect will the conversations and decisions made during the G20 meeting have on the Trump administration? Will the president wait and give the G20 the time for the G20 sherpas to file their report at the end of August? Will the president have the patience to let the world's leaders address the issue or will he try to show them he is serious about addressing the over-capacities in steel?

Steel Market Update saw modest improvements in flat rolled steel prices mostly associated with reductions of the discounts found at the lower end of the ranges. There are a number of mills that are waiting to see what happens with the Section 232 investigation before announcing new prices or opening their order books for the next business segment. The mills may be forced to open their books without a clear indication as to what is going to happen with Section 232. So, the market sits and waits.

SMU Steel Buyers Sentiment Index has come off historical highs set during the late first and early second quarters 2017. However, buyers and sellers of flat rolled steel continue to be optimistic about the potential for their company to be successful in both the existing market as well as three to six months into the future.

Buyers and sellers of flat rolled steel are clearly concerned about the pending Section 232 decision and its potential effects on the market, according to Steel Market Update’s latest market survey. The Trump administration continues to study whether steel imports are a threat to national security and should be restricted with new tariffs or quotas. Results of the investigation were to have been released by the end of June, but were delayed, keeping the market on pins and needles.

The final license data for June was reported by the Steel Import Monitoring and Analysis system of the U.S. Commerce Department on July 5. An explanation of the methodology that we at SMU use to analyze the trade data is given at the end of this piece. All volumes in this analysis are reported in short tons. The total volume of carbon and alloy products was up again in June to the highest level since March 2015. Flat rolled and long products were up, but semis decreased. Total rolled product licensed imports in the single month of June were 2,918,333 tons with a three-month moving average (3MMA) of 2,609,133 tons. We prefer not to dwell on single month results because of the extreme variability that can occur in individual products. In the comments below, we use three-month moving averages to give a more representative picture.

Steel Market Update (SMU) is pleased to announce that our next Steel 101: Introduction to Steel Making & Market Fundamentals workshop will be held in Ft. Wayne, Ind., and will include a tour of the Steel Dynamics Inc. (SDI) Butler steel mill. The workshop will be held at the Marriott Hotel in Ft. Wayne on October 4 & 5, 2017.

The Ft. Wayne event in October will be our 23rd Steel 101 workshop where we have worked with over 380 people involved in some way with the steel industry. This includes manufacturing companies, steel service centers, steel mills, trading companies, toll processors, financial community, rail and trucking companies, scrap companies and others associated with the industry.

A decision on Section 232 trade action is on hold until sometime after the G20 summit in Hamburg, Germany, this week. U.S. Department of Commerce officials have not announced a release date for the findings of the investigations on steel and aluminum imports and their impact on national security. The original due date was June 30th set by President Trump when the investigation was first assigned to the DOC.

The Trump administration was anticipating resistance from foreign leaders at the summit, but reports indicate there may be disagreement even within the president's cabinet on the appropriate scope of Section 232 and its recommended remedies.

President Trump heads to Hamburg, Germany, today for the G20 summit with trade deficits and steel dumping on his mind. Trump is expected to receive strong opposition on any attempt to use the Section 232 steel investigation as leverage to influence trade talks. G20 leaders have been critical of the White House’s casting of national security as a reason for restricting imports of steel and aluminum.

Trump’s determination to crack down on dumping was evident last week when he told South Korean President Moon Jae-in that the U.S. was getting a “rough deal” from the KORUS agreement and called on South Korea to stop enabling the export of dumped steel.

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:

Steel

If you compare prices between last week and this week, you will see the HR futures market has found support and has risen between $8 and $10/ST. There's a twofold reason. First, some restocking took place at service center levels, which extended lead times from mills, thus pushing mill prices slightly higher, as was recorded in the latest week's indexes. Second, more importantly, is the 232 investigation that has been ongoing since mid-April. While no evidence of direction from DOC has been published or made public, it has provided positive sentiment to steel/scrap pricing. DOC reports were originally expected to be presented to POTUS and staff by end of June, but it has been delayed, or at least the announcement has been delayed. The release is now anticipated post G20 summit and potentially later. The moving target announcement date has left HR futures sellers more cautious and selling liquidity a bit thinner.

Domestic raw steel production totaled 1,717,000 net tons in the week ending July 1, off 0.7 percent from the previous week and down 1.5 percent from the same week in 2016. The mill capacity utilization rate was 73.6 percent, down from 74.2 percent the prior week and 74.5 percent the same time last year, reports the American Iron and Steel Institute in Washington.

John Harris is the former director of raw materials for ArcelorMittal. Currently, he is a consultant and speaker on global metallics, and he will be a speaker at this year’s SMU Steel Summit Conference at the end of August. Mr. Harris and Philip Hoffman of Hoffman Iron & Steel have been conducting a friendly debate about the future of the Chinese scrap markets. Specifically, there is broad interest in the budding ferrous scrap collection in China and what this scrap will mean for world prices.

Steel Market Update published articles on Thursday, June 29, 2017 (Ferrous Scrap: Sideways in July?) and then again in Sunday’s issue, July 2, 2017 (Article Prompts Response on Chinese Scrap).

John Harris had the following to say in his most recent communication with Steel Market Update:

I read Philip’s [Hoffman] excellent comments on Asian scrap markets and concur with most of his observations. I offer you the following personal opinions and comments:

It is my opinion that China currently has a scrap surplus in the range of 100 million metric tons per year. Approximately 50 M mt/year of prime scrap is available just from their steelmaking and coil processing operations. This does not include available obsolete scrap, which could easily be in the same 50 M mt/year range. See justification as follows:

The following article was sent to us by one of our steel and scrap trading sources located within China. He has been actively involved in the export of ferrous scrap out of China this year and understands where that market is headed right now (and why). Here is what he shared with Steel Market Update earlier today:

Scrap exports from China have more or less ceased for the past 10-14 days due to government intervention. The reason being BOF mills in China have been procuring domestic scrap at cheap prices. Since April, total export of scrap from China is only around 175-200K tons. However, these export numbers, no matter how minimal they seem, have fueled the domestic price for scrap by 20-30 percent, and the domestic mills are crying foul. Since they are all state owned, they have appealed to the Port Customs to cease and deter exports of scrap and to protect the state owned mills' interest. As you can imagine, the Customs Bureau has only one option.

The mills' actions are not even relative to a shortage of scrap availability, but due only to the price increases cutting into their profits. The last time we checked, only 7-10 days ago, their margin was anywhere from RMB500-800/mt on Billets/Debars/Wire Rods etc.. Remind you of someone else in the USA?

Auto sales took a dive in June with the top three American automakers reporting sliding sales and foreign automakers reporting mixed results. Ford Motor Co. sales fell 5.1 percent year-over-year, while GM sales slipped 4.7 percent. FCA USA sales plunged 7 percent, in part due to a planned reduction in sales to its rental operation.

The Manufacturing ISM Report on Business exceeded expectations in June with a PMI reading of 57.8 percent. The composite index jumped 2.9 points for its strongest reading since August 2014, said the Institute for Supply Management, Tempe, Ariz. A reading above 50 indicates growth.

The new orders index strengthened with a 4 point increase to 63.5, while the production index gained 5.3 points to register 62.4. Backlogs grew for the fifth month in a row with the index increasing 2 points to 57. Suppliers struggled to meet increased demand, pushing the supplier delivery index up 3.9 points to 53.1 for a 14th consecutive month of slower deliveries.

Manufacturing growth remained steady in June, according to the JP Morgan Global Manufacturing PMI. The composite index was unchanged from May at 52.6. The PMI average for second quarter fell slightly below first quarter.

The Eurozone drove growth in June, accelerating the PMI for the region to its highest level in more than six years. Expansion eased in the U.S., Japan and United Kingdom. China led the emerging nations in manufacturing gains during June.

This is my gut feeling, my opinion based on what I have been reading and watching in the news like everyone else. The world is trying to figure out if President Trump is going to start a trade war and the first bullets are made with flat rolled steel, pipe and long products. I am getting the feeling that what ultimately comes out of the Section 232 process will be less attractive to the U.S. steel mills than what they thought they were originally going to get. By the way, I have been hearing the mills want quotas and Trump is leaning toward an across the board tariff.

By the way, ferrous scrap prices are slow to develop. There have been some obsolete deals done at sideways numbers but, our sources are telling us no prime deals yet. The Detroit market which normally leads has not settled. We will have more details about scrap and scrap pricing in Sunday evenings issue of Steel Market Update.

With the threat of a Section 232 decision in favor of the domestic steel mills looming over the market, Steel Market Update (SMU) has decided to take our Price Momentum Indicator from Neutral to Higher. It is our opinion conditions are in place to push flat rolled steel prices even higher from their current levels. SMU expects steel prices to rise over the next 30 to 60 days.

Steel Market Update received a question from a large service center group regarding the use of the Section 232 process on steel and whether the due diligence being done now could be used "down the road" and applied against another steel product. Here is the question we received and the response from trade attorney Lewis Leibowitz:

Stelco has been officially acquired by Bedrock Industries as of June 30. The former U.S. Steel Canada entered protection under the Companies’ Creditors Arrangement Act in September 2014 and will now stand on its own as Stelco Inc.

"This is an exciting day for Stelco and for all of those who have worked so hard to position this company for success,” said Alan Kestenbaum, Chairman, Bedrock Industries. “We are well aware of Stelco’s storied history and the special position it holds in the hearts of those in the communities of Hamilton and Nanticoke in which it operates, and across Canada. As Canada prepares to celebrate its 150th anniversary, it is fitting that we are celebrating the rebirth of Stelco, a company that played an integral role in building the nation, starting in 1910 as The Steel Company of Canada. We look forward to marking many more milestones in the coming years as we build this Canadian icon together.”

We ended the month of June with a change in our Price Momentum Indicator from Neutral (we had moved from lower to Neutral earlier in the month) to Higher. With the expectation of Section 232 being implemented by President Trump, we feel prices have only one way to go, up. How long that will last is going to be the question as we move into July.

On Thursday, Steel Market Update (SMU) published an article about the scrap markets entitled “Ferrous Scrap: Sideways in July?” In the article, John Harris, the former scrap buyer for ArcelorMittal and one of our speakers at this year’s SMU Steel Summit Conference, gave his opinions on the future issues associated with the industry. On Friday, we received a response from Philip Hoffman, Hoffman Iron & Steel, who is currently living in Vietnam and well aware of the issues the Chinese are having with scrap and scrap exports. Here are the comments he asked be published in response to those made by Mr. Harris:

Flat rolled steel prices inched higher this past week on the indexes followed by Steel Market Update (SMU). We saw just about everyone take benchmark hot rolled prices higher by $5 per ton. SMU took our HRC average from $600 to $605, Platts took theirs from $605 to $610 and SteelBenchmarker took theirs from $603 to $607 per ton. The $5 per ton spread from top to bottom is quite tight for these three indexes.

Once its new Ruhrstahl-Heraeus (RH) degasser is fully commissioned in the next 30-45 days, Big River Steel will have all its steelmaking equipment up and running. Except for “a few hiccups,” the startup of the new EAF mill in Osceola, Ark., has gone smoothly, said Mark Bula, chief commercial officer, “above plan, plan-plus.” Speaking at the recent AMM conference in New York, Big River CEO David Stickler said the new minimill is already running at 80-85 percent of rated capacity. By August, BRS hopes to be producing 130,000 to 133,000 tons a month, near full capacity for the 1.6-million-ton mill.

The Chicago Business Barometer took a giant leap in June, expanding from 59.4 in May to 65.7. The Barometer, which is designed to predict future changes in gross domestic product, was at its highest level since 2014. The average score for second quarter was 61.1, significantly stronger than the average of 55.1 in Q1.

The new orders score accelerated 10.5 points to 71.9 for its highest reading since May 2014. Production, backlogs and supplier delivery times all grew significantly in June. Order backlogs averaged a score of 52.5 for second quarter after contracting for the past nine quarters.

Inventories decreased as manufacturers worked to meet increased demand. Inventories were at their lowest level of the year, down 3.6 points to 51.9. Factory gate prices were stable after declining for three consecutive months. Prices for steel and plastic products rose, but survey respondents noted that suppliers were not passing through price increases.

Metalforming companies are not expecting much change in business conditions in the next three months. The latest Precision Metalforming Association (PMA) Business Conditions Report indicates that only 34 percent of survey participants predict an improvement in general economic activity, while 58 percent predict no change.