GOES M3 Price Index Drops 10% as Domestic Mills Seek Price Hike

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If buying organizations need a cue from the market to drive grain-oriented electrical steel (GOES) contract discussions with the two primary domestic producers, the MetalMiner M3 spot price index for November says it all.

GOES_Chart_November-2014_FNL2

The index dropped by 23 points, more than completely erasing last month’s gains. The monthly GOES MMI® registered a value of 193 in November, a decrease of 10.6% from 216 in October.

Compare With Last Month’s GOES Price in the Monthly ®MMI Report.

Despite losing its GOES case (which we will return to in just a moment), AK Steel won its non-oriented electrical steel (NOES) case against 6 countries – China, Germany, Japan, South Korea, Sweden and Taiwan. Duties ranged from 6.88% for South Korea to 407.52% for China.

Mills Taking Hard Line With GOES Customers

Industry sources tell MetalMiner the domestic mills (and their sales organizations) have attempted to make a strong case to customers that should the appeal go in their favor (a giant If, considering the final determination vote of 5-1), then anti-dumping duties could be applied retroactively. Currently, no duties apply toward GOES imported from Germany, Poland and Japan.

And therein lies the rub. According to a report on ITC appeals, not many cases have been reversed after a court appeal. Moreover, the exceptions likely only occur if the “composition of the commission has changed – not because a ruling by the courts caused an individual commissioner to reconsider his or her original determination.”

Finally, the paper states that private party litigants seeking an appeal generally ask two questions – how close was the original vote and has the make-up of the commission changed since the original vote, such that the commission would come to a different conclusion on a remand?

Here the answers seem less likely.

So What’s a Buyer to Do?

The appeal process actually statistically works against the petitioners and tends not to succeed very often.

But the mills may continue using this threat as negotiating leverage for 2015 and beyond, particularly for contract volumes. Here, mills continue to hint for the need of slight price increases, but most consumers won’t allow that. Meanwhile, offshore producers including the Japanese, Chinese and Korean mills claim restricted supply and have quoted prices based on allocation.

What’s the Exact GOES Coil Price?

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A 10.6% decline for US grain-oriented electrical steel (GOES) left it at $2,658 per metric ton.

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The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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