We at Ace Steel Supply are issuing the following alert to our customers: Volatility due to Section 232 is already hitting the steel and aluminum supply markets hard.
Domestic US steel mills produced 82 million metric tons, and the US imported 32.3 million metric tons in 2017. The loss of 2/7 of the total steel supply will cause severe problems. It will likely take years for domestic mining and mills to restore former production capacity to make up the shortfall.
Metals prices are already spiking.
- Many mills are NOT QUOTING PRICES until Section 232 is settled in April.
- We are already seeing 24-hour quotes. FIRM PRICES are not being given; all are subject to order confirmations.
- Section 232 duties on imports will essentially shut doors on a lot of offshore mills; those mills not named in Section 232 investigations will be pricing products very close to that of domestic.
- Long time metal buyers will recall when steel hit the historical highs of 2006-2007, when light gauge 316 stainless ran $5.00/lb, and the surcharges doubled or tripled the base rate. We expect to be seeing a similar, if not worse, situation again.
- We fully expect domestic mills will jack up prices, that there will be hedge buying, and there will be price gouging.
- Processors who handle cutting and packaging are backed up.
- Steel supply companies are now very protective of any soft reserves they have in order to service preferred customers.
- Buyers without managed inventory contracts will likely be frozen out.
Whatever is in inventory, it is already worth more today than it was yesterday.
At Ace Steel Supply, our goal is to PROTECT the customers we have, particularly the ones we have contracts with.
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