As you know, Ace Steel Supply subscribes to thousands of dollars in industry publications, from which we aggregate and publish our newsletters and blog posts. As we informed you in earlier blogs, Section 232 tariffs are supposed to be applied beginning Friday the 23rd. We offer the following updates:
What we know so far:
Tariffs will be delayed for some countries while some continue negotiations to exempt themselves from the steel and aluminum tariffs.
Uncertainty still reigns.
Trump has decided, that some countries should be exempted based on a certain set of criteria. Negotiations should conclude in late April. The list of product and nation exclusions are still being compiled by Commerce Department. Each unique steel or aluminum product requires an exemption request from the individuals or organizations that use them.
Mills are adding the tariffs to their orders in advance.
Some smaller domestic service centers are experiencing trouble in borrowing enough money to replenish inventories, so they are holding a 1-month supply instead of 2 to 2.5 months. Long lead times have them concentrating on soaking up pockets of spot supply instead of buying from mills.
Domestic price indexes for both aluminum and steel are higher than Asian. Imported sheet and plate prices have jumped, and the mills are withholding supply. Cold Rolled Hot Rolled and Galvanized flat products are in short supply.
Hot Rolled has been under anti-dumping duties for the last couple of years with many countries will likely remain so. Hot Rolled Coil industry experts say it should top $50 cwt FOB the mill. Domestic Hot Band lead times are out to May or June.
Mexico and Canada: Exemption remains in place during NAFTA renegotiations.
Japan: Hit with 25% steel tariff. Considered to be high quality, high cost technical boutique steel.
European Union: Currently exempt for now while negotiating trade. Worried about a potential supply glut due to tariffs and other countries diverting steel to the EU.
South Korea: Exempt for now while negotiating trade. Offers from South Korea are frozen but may resume as early as the week of March 26 for May production
Australia: Exempt. US west coast mills rely on facilities that process imports or convert slabs. Australia shipped only 366,900 tons of steel to US ports last year, or about 1% of the total US imports. Hot-rolled coil from Bluescope, for example, already faces anti-dumping duties of 29.58%. Not currently a big exporter, Australian aluminum could be sending a lot more to the US as prices from other locations increase.
Argentina: Exempt for now while negotiating trade.
Brazil: Currently exempt from tariffs. No Brazilian galvanized is coming anytime soon; they haven’t been in the market for some 9 months. Brazil stopped offering galvanized tons unless distributors accepted all unforeseen tariff duties, which few dealers accept.
Slabs, on the other hand, have been coming steadily from Brazil for some time, feeding CSI and other re-roller mills. We project slabs will likely be exempt.
Summary: As existing inventories run out, prices will continue to go up. It is already down to available supplies. An industry spokesman stated March 21 at a steel conference in Chicago, “If you are not a contractual buyer, good luck finding steel… because if you are going to the mill to get spot tons, the only way you are going to get them is to pay a lot of money and wait.”
If assuring your steel supply is important to your business, call Ace Steel Supply to schedule a consultation to get into a custom-tailored inventory stocking program, which often provides stabilized pricing at a lower than market rate. 832-300-1030.