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China or Trump: What Could Drive Steel Companies in 2017?

PART:
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Part 5
China or Trump: What Could Drive Steel Companies in 2017? PART 5 OF 14

The Pros and Cons of Investing in Nucor

Nucor investors

Previously, we looked at February’s flat rolled steel import data. In this article, we’ll look are rebar (reinforcing bar) imports. Nucor (NUE) is North America’s largest rebar supplier. It also has rebar fabrication operations in its downstream business (AKS).

Rebar is used to strengthen concrete in bridges, highways, and buildings. Rebar is also used in the non-residential construction industry. Gerdau (GGB) and Commercial Metals Company (CMC) are other leading rebar suppliers (STLD).

The Pros and Cons of Investing in Nucor

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Reasons to be pleased

Rebar imports fell 9.2% year-over-year in February. Lower rebar imports are good news for the companies producing these products, including Nucor. Furthermore, on March 1, 2017, the US Department of Commerce imposed preliminary duties on rebar imports. As noted previously, trade duties have helped US steel companies in the past by raising their base selling prices.

Trade action

Then there’s the bad news. While hefty duties have been imposed on Japanese steel companies, Turkish steel companies have been let off with duties of between 5.3% and 7.0%. Remember that Turkey is the largest rebar exporter to the United States. Turkish steel companies managed to get away with lower duties earlier as well.

Lower duties on Turkish steel companies mean that rebar trade cases may not be as effective as flat rolled cases. Nonetheless, we should wait for the final determination, which is expected later this year.

While rebar imports fell in February 2017, OCTG (oil country tubular goods) imports continued their upward march. We’ll discuss this in detail in the next article.

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