SMU Q&A: On Steel Tariffs, Prices

A: “Higher.”

A: “Higher by 5 percent.”

A: “Prices are firm to trending slightly up.”

A: “Depending on how negotiations go with Canada and Mexico, prices will stay the same or go up. I don’t see much chance of pricing going down anytime soon.”

A: “I see prices flat to slightly up.”

A: “I believe prices will go up in the next 30-60 days on plate. I’m guessing $30-40 a ton.”

A: “It appears they are going to push it a bit higher. I’d expect both plate and sheet to go up another $30.” 

A: “If the current tariff situation is the same, I see prices up $20-25 per ton.”

A: “I think we see prices flat to up $40 a ton. Plate appears more poised to rise quicker, since it might be the tightest product in that timeframe.”

A: “Until NAFTA is settled, there will be nothing to keep prices down. My personal outlook suggests that the market will follow the near-term direction of futures—up.”

A: “Slightly higher, $50 per ton or less.”

A: “Flat. I don’t see any reason for the mills to lower or raise them. The mills continue to talk increases, but nothing yet.”

A: “Foreign has re-entered the market at levels that will put pressure on the mills in the spot market since the domestic prices have pushed to a level

where foreign with the tariffs can have value.”

A: “The domestic mills are cautiously optimistic for the next 60 days as maintenance outages and lower import volumes will offset any potential summer seasonal slowdown. After August, it’s anyone’s guess as to what will happen as imports will begin to return in volume and domestic outages should be completed. Meaning we’ll have more supply available going into our slowest demand time period, the fourth quarter. It looks like a period of correction, but how big will depend on many variables including trade updates, demand, global pricing, etc.”

Q: Has the decision to no longer exclude Canada, Mexico and Europe from the tariffs had any impact on your business?

A: “Not yet, but it will in six months.”

A: “No, but it might in the future.”

A: “No direct impact but, yes, indirect impact is pushing prices up.”

A: “It is beginning to affect us, particularly with automotive business.”

A: “Absolutely, via higher prices and available supply.”

A: “Yes, we’re very uncertain how to handle shipments to and from Canada and Mexico.”

A: “Spot prices are definitely going up. Exclusion of Mexico has major implications for us. Mexico is now more expensive than domestics (for July production).”

A: “Our domestic mills have both operations and trade supply chains with both countries, and they are warning that there may be fallout that affects their approach in the U.S. To the extent that U.S. buyers, who’ve relied on Mexico and Canada for regular supply, look to replace this with domestic supply, it will likely put more pressure on domestic availability.”

A: “The tariffs are creating more uncertainty. Most expect the EU and NAFTA tariffs to be walked back, but it takes time, and plate inventories are relatively thin.”

A: “There is a HUGE impact with Canadian steel mills that are forcing the tariff on us. In turn, we must pass it on to our customers who are not interested in paying more. This will be a struggle.”

A: “Trump needed to take a hard stand ahead of the North Korea meeting. Now he can start to negotiate the Section 232 tariffs away country by country.”

A: The NAFTA situation has cost us money and it shouldn’t have. As a consumer, I get it. As a business person, we’re paying an unjust penalty for material that should have been free from the burden. We keep hearing all of this bluster from countries whining about how their steel and aluminum exports to the U.S. are being unjustly tariffed. I’d submit that there is not one country that is paying for the tariff. It is the U.S. manufacturer/end user that is bearing this burden. Attempting to run our businesses under this general uncertainty while being subjected to daily whimsy is old already.”   

Q: Other thoughts or concerns about the market?

A: “We are also having major issues with trucking our goods to our customers. Trucking companies are finding the highest paying industries and dedicating their fleet to them.”

A: “There’s a renewed interest in offshoring more finished components as a result of the imbalance in global steel prices. Companies like GE and Cat are going to move more and more finishing offshore in response. It is already happening. They will bring in machined parts and subassemblies rather than steel.”

A: “There is a rush by many to offshore their products, parts, subassemblies.”

A: “Potential repercussions of the affirmative circumvention decision. Applying the theory of what’s not substantial transformation, we could be in for some really long-term consequences should the domestic mills take advantage of this opening.”

A: “One thing that strikes me in all of this chaos is the surprise and anger being voiced by the U.S. mills (and their trade associations), the unions, and other related parties, about the decision by Trump to slap Canada and Mexico with the Section 232 tariffs. Now, not unlike the fool who bargains with the devil, be careful what you wish for. Not only does it appear that these tariffs (and the retaliatory tariffs from Mexico and Canada) will be around for the foreseeable future, any hope for a revised NAFTA agreement is out the window, as well. The moment he strayed from the mills’ trade playbook, they started to question Trump’s thinking, logic, etc. Well, all I can say is welcome to the party! To those that cling to the notion that this is all some grand Trump negotiating plan, and that we’ll bring all of the rest of the countries in the world to their knees if we just slam them harder and harder, I think we’ll be waiting for a while. In the meantime, complex supply chains and relationships among the U.S., Canada and Mexico that were forged over a few decades now face a very uncertain future. There’s an increasing risk we could easily end up worse off as a country depending on what transpires.”