Final Thoughts
Final Thoughts
Written by John Packard
June 17, 2019
I have been in New York City where one of the competitors of Steel Market Update was conducting a steel conference. There were a number of satellite mini-conferences surrounding the NYC event. I attended three of them: the CRU Steel Briefing, which attracted about 100-150 executives; the Bank of America Merrill Lynch dinner drawing a combination of investors, steel people, scrap execs and yours truly; and a private lunch hosted this afternoon by a manufacturing company with steel traders, futures brokers, a service center, analyst and me.
The biggest question was, what will it take for prices to bottom? In my opinion, it will be sooner than what I heard from various sources over the past couple of days. My opinion is driven by what we are seeing in our service center spot survey, inventories (not quite there, but moving lower), future foreign orders almost non-existent and mills getting close to marginal cost. I believe we will see an attempt to stabilize pricing in the form of a price increase announcement within the next few weeks. Whether it results in a dead cat bounce or takes hold (or fails), I do not know. However, we are asking our survey respondents to weigh in and provide their opinions. We will report on those results in Thursday’s SMU newsletter.
I overhead an executive of a scrap company talking about July commitments taken from a mill at down $20 from the June numbers. I can’t comment as to what mill and if this will be universal come July, (but you should use the information as what is possible/probable, and that it could go lower than that).
As I mentioned in a previous article, the scrap dealers think it will bottom in July.
The SMU Steel Summit Conference was one of the topics of conversation here in New York. I think you will see a bigger presence by the financial community as they are beginning to realize ATL is where all the steel executives are going to network and to discuss what will happen with supply and demand as they prepare for 2020. You can learn more about our conference on our website: www.SteelMarketUpdate.com
Our next Steel 101 workshop will be Oct. 8-9, 2019. We will be touring the Nucor Gallatin mill (and their brand new galvanizing line, which will begin running in a few weeks). We are working on hotel negotiations right now and will advise as soon as we are ready to begin registrations.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
The whole SMU team is packing up our laptops and our SMU polos/cardigans, loading up the PowerPoint slides, and preparing to make the trek down to Florida for the Tampa Steel Conference. There will be plenty to talk about!
Final Thoughts
From one group of folks, I’ve heard that Trump might not wait until Feb. 1 – the date he threatened on to place tariffs on China, Canada, and Mexico. They say he could act as soon as Friday. And then there are those who don’t think anything will happen before April 1. That’s the deadline for Commerce, Treasury, and USTR to submit key reports on “America First Trade Policy” to President Trump.
Final Thoughts
Trump made a clarification in a speech on Monday. Previously, he had declared the word “tariff” the most beautiful word in the dictionary. No longer.
Final Thoughts
President Donald Trump on Sunday hammered Colombia with 25% tariffs and threatened to increase them to 50%. Trump in a post on Truth Social said he took the action not because of a trade dispute but because the South American nation had refused to accept planes carrying deported immigrants. The president also cited "national security" concerns, just as he did to justify 25% Section 232 tariffs on steel in his first term. Even the 50% threat echoes his first term. Turkish steel, like that of most nations, was assessed a 25% tariff in March 2018. Trump doubled Turkey's tariff to 50% via a tweet in August of that year over a matter unrelated to steel.
Final Thoughts
We surveyed many of you this week and asked what you wanted to see from the new Trump administration. Responses were varied but fell largely into three groups: tariffs and trade policy, the Nippon-U.S. Steel deal, and those who are concerned about too much government sway in steel. Some also expressed hope that President Trump would continue the infrastructure spending that began under former President Biden.