GOES MMI: 14-Point Jump Paced by Global Demand, Section 232 Tariffs

The GOES Monthly Metals Index (MMI) jumped by 14 points, marking the second consecutive monthly increase. The increase came as a result of tightness globally for thin gauge material, Section 232 import tariffs and healthy global demand.
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Japan excels at the production of thin gauge material used to improve transformer efficiency. Last month, MetalMiner reported Japanese mills sought to raise prices for the second half of this year by $100+/ton. A recent TEX report suggests European mills will seek similar increases for the second half of this year for middle-grade materials.
That leaves the sole domestic producer, AK Steel, in a strong position to ask for price increases for 2019 as buying organizations come back into the market for contract pricing. Meanwhile, Big River Steel earlier this year announced plans to produce grain-oriented steels, including H1B. The company, according to its website, wanted to first produce all of the nine grades of motor lamination steels and will now turn its focus toward grain-oriented electrical steel (GOES) and non-oriented electrical steel (NOES) – a welcome development to buying organizations.
Meanwhile, in early July, Nachi American Incorporated filed five additional exclusion requests for M2 materials. All of the materials within those exclusion requests appear within the standard product range for AK Steel. Nachi American a cited lack of sufficient availability as the reason for requesting the exclusion. The company currently imports its material from Japan.
South Korea, by way of negotiated agreement, remains exempt from the tariffs, though subject to quotas. However, according to International Trade Administration import data and MetalMiner analysis, South Korean imports make up only a paltry 26.3 tons. In other words, more imports from South Korea could come into the U.S. without the tariff.
GOES imports dropped dramatically since the Section 232 proclamation but Japan still represents the lion’s share: