Final Thoughts
Final Thoughts
Written by John Packard
March 12, 2018
Mexico, Canada, Australia … (Europe, Russia, Turkey?) … which will be the next countries to negotiate directly with President Trump, who appears to be less interested in building steel jobs than getting trade concessions (or personal acknowledgement) out of many of our allies.
With President Trump, you need to review his Twitter account should you miss an excluded country or negotiation position:
In a more recent Tweet, President Trump has suggested that Wilbur Ross is negotiating with Europe so they can be excluded from the steel and aluminum tariffs.
So, my question is: At what point does the Section 232 tariff become irrelevant?
And, what will happen to steel prices once there is more supply than demand? Could we see another 2008-type destruction of steel prices? I think, yes, since the prices are not running up due to true cost fundamentals and will need to reset once supply is back in balance (or steel buyers no longer fear running out of steel and begin cancelling their double-orders).
Key countries to watch when it comes to exclusions: Russia and Brazil (slabs), South Korea (OCTG and line pipe), Taiwan (Galvalume), Japan and Germany (automotive steels), South Africa and India (light-gauge galvanized).
Here is something from a large service center that I have also heard directly from end users: the mills are already destroying their core customer base. “Biggest immediate impact of 232 is extremely concerned customers. Having multiple conference calls, emails, etc., to educate customers on what’s happening. Interestingly, already hearing of strong interest by companies to immediately research viability to source metal parts/components/segments in Mexico and Canada. Yes, that’s right-Canada. These are 2 closest countries and therefore simplest supply chains to consider. There’s an overwhelming feeling of incredulity about the mills’ raising prices without impunity in sync with developments. In this vein, one mill source confided that they think HR goes to $900+, but they’re trying to move up each week so as to not look like they are taking advantage of the situation. I assured him it was too late for that…”
A comment about our upcoming SMU Steel Summit Conference. Steel Market Update DOES NOT use any company to sell hotel rooms. If you are contacted and told rooms are scarce or some other scare tactic, hang up. Do NOT purchase any rooms through anyone other than going to the links provided on our website. We currently have plenty of rooms available for the Aug. 27-29 conference.
If you are making early airfare arrangements for our conference, you will want to arrive by late morning on Monday, Aug. 27, and you do not want to leave until approximately 5 PM ET on Wednesday, Aug. 29. We will book a significant speaker for the end of the conference.
I welcome your comments. You can reach me at: John@SteelMarketUpdate.com.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
We had an October surprise here at SMU on Wednesday. I was working from the CRU office in Pittsburgh, and the internet connection briefly went out. As luck would have it, that happened smack in the middle of a live Community Chat webinar. Fortunately, my colleague David Schollaert stepped in, Zekelman Industries CEO Barry Zekelman rolled with the punches – and the show went on. Could there be any more October surprises in store for us and for the steel market?
Final Thoughts
We just wrapped up another Steel 101 workshop, easily the most hands-on industry workshop on steelmaking and market fundamentals, in this humble opinion. Last week on Tuesday and Wednesday, SMU’s Steel 101 was held in Starkville, Miss.
Final Thoughts
Everybody has an opinion about politics these days. More importantly for our readers, though, every business has a bottom line. A popular question in our most recent steel buyers survey asked how uncertainty around the upcoming US presidential election could affect that line.
Final Thoughts
I’m trying to make sure this is not a TL;DR Final Thoughts. As a journalism school professor once told me, ‘No one but your mom reads more than 1,000 words.’ Also, as the old adage goes, a picture is worth a thousand as well. With that in mind, below are a couple of charts that I think go a long way toward explaining how prices and lead times have been relatively stable despite concerns about demand.
Final Thoughts
It’s another week of big headlines for the world writ large – an expanding war in the Middle East, another potentially catastrophic hurricane – and not much going on in the world of steel prices. “Call me Stevie Wonder, I see nothing.” That’s how one service center executive described the current sheet market. There seems to be almost a competition among some of our Community Chat guests and contributors to outdo each other in flowery ways to say, “