john packard - steel market update - reusable packaging

John Packard - Steel Market Update

© Steel Market Update 2015

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How did I get from there to here?

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It all started with a woman (doesn’t everything?)

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Like any relationship – it had its fun moments

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You never know when life is going to throw you a curve

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• “To awaken quite alone in a strange town is one of the pleasant sensations in the world. You are surrounded by adventure. You have no idea of what is in store for you, but you will, if you are wise and know the art of travel, let yourself go on the stream of the unknown and accept whatever comes in the spirit in which the gods offer it.” from The Journey’s Echo by Freya Stark 1929

And so the journey began…

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1977 to now… (41 years)

• Rolled Steel

• Innovative Steel

• Pacesetter Steel

• Duferco/Sterling Steel (fired)

• Pacesetter Steel

• Paragon Metal Services (agency)

• Represented Winner Steel (contract terminated 2007 after mill sold to Duferco JV)

• Represented Novosteel(bought by Nucor), PN Enterprises

• Started SMU Aug 2008

• Purchased by CRU May 31, 2018

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Lets Talk about the Market

• Trade Cases

• Circumvention

• Section 232

• Exclusions

• Price Increases

• SMU Proprietary Products

• SMU Price Indices• Lead Times• Negotiations• SMU Sentiment• SMU SC Spot• SMU SC Inventories• CRU buys SMU• Steel 101• SMU Steel Summit

2019

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2010 2011 2012 2013

Total 23,929,136 28,496,273 33,474,546 32,150,858Semi-finished 4,948,372 6,508,834 7,442,914 7,166,893

Hot Rolled 2,362,676 2,625,095 2,722,723 2,923,820Cold Rolled 912,556 1,085,987 1,304,352 1,299,359Galvanized 1,420,677 1,461,918 2,002,249 2,077,157

Other Met. Coated 413,530 532,523 662,207 719,937

Annual totals, net tons

2014 2015 2016 2017Total 44,338,039 38,739,131 33,021,473 37,999,383

Semi-finished 10,392,733 7,143,067 6,535,992 8,302,913Hot Rolled 4,303,954 3,848,935 2,877,559 2,115,580Cold Rolled 2,575,923 2,300,191 2,202,110 2,589,579Galvanized 3,313,258 3,355,520 3,098,055 3,421,183

Other Met. Coated 1,020,907 1,053,743 1,033,654 1,173,615

Steel Imports – Surge = Trade Cases?

• In 2015 U.S. mills filed anti-dumping and countervailing duty claims against hot rolled, cold rolled, coated and plate steels.

• Virtually all of the countries identified ended up with AD and/or CVD duties with most going into effect during calendar year 2016.

• Imports of foreign steel dropped in 2016

AD/CVD Complaints

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Trade Cases – Cold Rolled

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Countervailing Duties Antidumping Duties

CountryPreliminary Results (%)

Final DOC Determination (%)

Preliminary Results (%)

Final DOC Determination (%)

ITC Final Injury Determination

16-Dec-15 21-Jul-16 1-Mar-16 21-Jul-16

Brazil 7.42 11.09 - 11.31 38.93 14.43 - 35.43Affirmative

(Sept 2, 2016)

China 227.29 256.44* 265.79 265.79**Affirmative

(Jun 22, 2016)

India 4.45 10 6.78 7.6Affirmative

(Sept 2, 2016)

South Korea 0.18 - 0.61 3.91 - 58.36 2.17- 6.85 6.32 - 34.33Affirmative

(Sept 2, 2016)

Russia 0.01 - 6.33 0.62 - 6.95 12.62 - 16.89 1.04 - 13.36Affirmative

(Sept 2, 2016)

Japan NA NA* 71.35 71.35**Affirmative

(Jun 22, 2016)

United Kingdom NA NA 5.79 - 31.39 5.40 - 25.56Affirmative

(Sept 2, 2016)

**Final Determinations for China and Japan were issued on May 17, 2016

Vietnam/China Circumvention Suit

Vietnam 256.44 256.44 199.76 199.76Affirmative

(May 21, 2018)

• The domestic mills filed a “circumvention” complaint against Vietnam saying China was circumventing AD/CVD duties by having their substrate converted in Vietnam and shipped to the U.S.

• The mills advised that the cost to produce hot band was significantly greater than CR/Coated and conversion was not enough to change origin.

• The U.S. government agreed with domestic mills.

Next Circumvention

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• In April 2017 President Trump requested Section 232 investigation claiming steel and aluminum were necessary for national security purposes.

• March 2018 President Trump announces 25% tariff on steel and 10% tariff on aluminum

Then…Section 232

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• Once 232’s were implemented the DOC put in an exclusion request process.

• Companies can object (a number of mills have objected to many of the requests).

• There is a rebuttal process

• Bottom line: many products have not been able to get through the exclusion process.

• Products are still coming in and companies are paying the 25% tariff

Exclusion Process

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2010 2011 2012 2013

Total 23,929,136 28,496,273 33,474,546 32,150,858Semi-finished 4,948,372 6,508,834 7,442,914 7,166,893

Hot Rolled 2,362,676 2,625,095 2,722,723 2,923,820Cold Rolled 912,556 1,085,987 1,304,352 1,299,359Galvanized 1,420,677 1,461,918 2,002,249 2,077,157

Other Met. Coated 413,530 532,523 662,207 719,937

Annual totals, net tons

2014 2015 2016 2017Total 44,338,039 38,739,131 33,021,473 37,999,383

Semi-finished 10,392,733 7,143,067 6,535,992 8,302,913Hot Rolled 4,303,954 3,848,935 2,877,559 2,115,580Cold Rolled 2,575,923 2,300,191 2,202,110 2,589,579Galvanized 3,313,258 3,355,520 3,098,055 3,421,183

Other Met. Coated 1,020,907 1,053,743 1,033,654 1,173,615

Steel Imports – Greed = Trade Cases?

Cold Rolled Steel Imports


Raw Steel Production Capacity Utilization


Hot and Cold Rolled Steel Prices

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$935

$820

Hot Rolled Cold Rolled

SMU Hot Rolled Price Index with Nucor Steel Price Increases

$550

$600

$650

$700

$750

$800

$850

$900

$950

Q12018

Q4 Q4Q2 Q3

+$40/ton

+$30/ton

+$30/ton

+$30/ton

+$30/ton


Do

llars

pe

r n

et t

on

SMU Hot Rolled Index & Lead Times

3.50

3.75

4.00

4.25

4.50

4.75

5.00

5.25

5.50

5.75

$550

$600

$650

$700

$750

$800

$850

$900

$950

$1,000

Q12017

Q2 Q3 Q4 Q12018

Q2 Q3

SMU Hot Rolled Price Index SMU Hot Rolled Lead Times

Lead Tim

es (weeks)


SMU

Ho

t R

olle

d In

dex

($

/Net

To

n)

Mill Lead Times

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Hot Rolled: 3.96Cold Rolled: 6.06Galvanized: 6.66Galvalume: 7.60


3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

Lead

Tim

es in

Wee

ks

Mill Negotiations

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Are you finding the domestic mills are willing to negotiate pricing on brand new orders placed this week?

72%86% 81% 82%

57%

31% 29%13% 12%

32%

28%14% 19% 18%

43%

69% 71%87% 93% 88%

68%

Sept

7%

AugJune July Oct

54% 58% 50%61% 53%

25% 21% 13% 22% 18% 13%

46% 42% 50%39% 47%

75% 79% 87% 78% 82% 87%

AugJulyJune Sept Oct

60%50% 43%

67%78%

50%

22% 29% 33%

67%

40%50% 57%

33%22%

50%

78% 71% 67%

33%

June July SeptAug Oct

100%

Hot Rolled Orders Cold Rolled Orders

Galvanized Orders Galvalume Orders

Yes No


60% 67%53% 48% 42%

18%33%

17% 12%

40% 33%47% 52% 58%

82%67%

91% 96%83% 88%

Oct

4%

July AugJune

9%

Sept

23

85 89

66

31

73 78

41

18 18

38

17

43 38 41

6 11

31

7

52

3326

44

74 7890

96 96 98

79

46

28 28

5565

34

11 1224

8

39

7

15 11

32

56

27 22

51

71

53

52

54

5558 54

7576

69

86

58

48

6163

54

26 2210

16

52

69 70

4535

58

80 7360

57

61

40

69

13 8 11

29

10

2919

137

40

6 11 8 915 16

35

58

24

2

4

Q12017

2452

Q2

2

Q3 Q4

2

Q12018

4 2

100

5

Q2

3 2

Q3

2

Q4

We are lowering prices

We are keeping prices the same

We are raising prices

Service Center View of Selling Prices History


out of 100%

Service Centers- Compared to two weeks ago, how is your company handling spot pricing to your customers at this time?

Historical AK SteelPrice Announcements

+$30 +$30 +$30 +$25 +$30 +$30 +$30 +$40+$30 +$30+$40

SMU Buyers Sentiment IndexThree Month Moving Average at +63.50

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62 65 69 7173 74

74

7474

73

7271

69

6867

66

6666 64

64

64 64 64 66

69 71 7374

72 7069

68

6767

67

6767

66

6565

65

64 6564

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

80

90

100

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

80

90

100

Q4Q1 Q3Q2

2017 2018

Steel Market Update Buyers Sentiment Index 3MMA


Op

tim

istic

Pe

ssim

istic

SMU Future Buyers Sentiment IndexThree Month Moving Average at +59.67

25

67 69 71 73 7474

73 73 73 72 71 70 69 67 66 66

6767 67

67

66 66 66 6769 71 73 73 6966 61 61 62 62 60 61

60

60

6160

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

80

90

100

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

80

90

100

Q1 Q4Q2 Q3

63 61 59 59

2017 2018

Steel Market Update Future Buyers Sentiment Index 3MMA


Op

tim

istic

Pe

ssim

istic

May 31, 2018

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Service Center Inventories


And we all live happy ever after…

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Steel 101: Introduction to Steelmaking & Market Fundamentals

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Instructors: John Packard, Peter Wright, Charles McDaniels, Steve Painter, Mario Briccetti, & Roger Walburn

We have both classroom & on-site (mill)

instruction during our 2 day workshop.

For more information visit our website here.

Steel 101 Workshop, Severstal Dearborn 2012

https://www.steelmarketupdate.com/events/steel101

Next Steel 101 WorkshopDecember 11-12, 2018

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Our next Steel 101 workshop will be held in Toledo, Ohio on December 11-12, 2018. SOLD OUT. Followed by our Columbus, Mississippi workshop on January 29-30, 2019.

If you would like more information about any of our workshops, you may visit SteelMarketUpdate.com/Events, call our office at 800-432-3475, or e-mail our team at [email protected].

Steel 101 Workshop, NLMK Indiana 2015


mailto:[email protected]


Steel Summit 2019

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August 26-28, 2019Atlanta, Georgia

Georgia International Convention Center

Questions?

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When you need answers… www.SteelMarketUpdate.com

john packard - steel market update - reusable packaging

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