Metal Center News

JAN 2018

Metal Center services the metal center and toll processor industry.

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rebate. They're still pricing lower than they were before. They're still living on the third-quarter rebate, and we fig- ure that prices won't come back to nor- malization until their inventories are turned out to the current levels. It's a good theory anyway. MCN: We talked a little about Section 232. What is the effect downstream? N Paul Blaisdell: It makes our cus- tomers very uneasy. It props the prices, but there are a lot of conversations about uncertainty. N Sennett: When you look at the big OEMs, the Tier 1s and Tier 2s feed- ing those people, they're going to get squeezed in the middle. It could be a real issue as we move forward. Their ability to pass through these kinds of increases. It may not be there for them to do it, and it could cause some seri- ous issues, bankruptcies. N Heneveld: That's why you could see this thing die the death of 1,000 cuts, because I think you're seeing all the pushback from everything down- stream. It was full steam ahead, and now everybody's voicing their com- plaint, or opposition, or vulnerability based on what happens. It's not a done deal at all. MCN: Do you think what we'll get will be tepid? N Heneveld: Watered down. You won't recognize it. N Prine: And you don't know the when. Six months from now, we might still not have it. It's not their top pri- ority right now; it's tax reform and healthcare. MCN: The arrival of Big River, what effect has had that on the supply of material? N Sabel: It had an impact on scrap, which had an impact on price for a while. I think everybody outside of Big River was surprised at the speed they got up to production. It came up really, really quick and that's fairly rare. N Bernstein: Big River is the first mill really heavily transacted in fu- tures. MCN: What's your feeling on that? N Bernstein: My feeling is it's great. Everybody for a decade has bought aluminum. It brings some visibility forward in pricing. It takes a lot of the guessing out of it. You can still do your spot things, but it provides you with an opportunity to look forward. MCN: Will the other mills follow suit? N Bernstein: I have no idea. Those guys came in, maybe it's their back- ground with the Koch brothers, that heavily commodity-based background, I can't speak to that. MCN: Are there any other changes with mills? N Kennon: I think Nucor is going to be the price setters in the tubing mar- ket, even over Atlas, at some point. I'm not sure it's here yet. N Sennett: On the flat-rolled side, one of the big things we're starting to feel is with the lightweighting going on. It's in transportation, it's trailers, it's going to be in ag. It's going to be everywhere. Everyone is going to be pushing that way. The AHSS is push- ing carbon mills into areas they've never been before, a lot of them are learning as they go along. They know what the market needs, they can't nec- essarily produce it well yet. When you see people coming in like Big River and they're producing high-strengths pretty well, that's going to push some of the historical mills to get better. That moves directly into aluminum too. It's going to be a huge boom in the next few years, to the point where they're going to be adding capacity, possi- bly new mills being announced. That whole direction will pull more possible value into that supply chain. N Kennon: As far as Big River goes, we gave them the first order back in June. We were the first to order 410 off the mill. There were a couple of hic- cups, but it all worked out. I'm a small player in the flat-rolled world. As far as we're concerned, they've done well with us. MCN: What kind of other changes are in store for your industry? N Prine: In our business, it's defi- nitely equipment. The big guys make it impossible to make any money on that stuff. It's forced us, in a good way, to get more equipment and do more parts, more manufacturing. One of Metal Center News — January 2018 ❘ 19 NASA Roundtable " The flat-rolled market is going to stay relatively firm. All the indicators we normally see in a down market – cheap steel at the end of the year, a lot of foreign coming in at low numbers— none of that stuff is out there right now. " Rich Merlo, JDM Steel Service

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