X
<

What Could Drive Cleveland-Cliffs in 4Q17 and Beyond

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 3
What Could Drive Cleveland-Cliffs in 4Q17 and Beyond PART 3 OF 11

US Steel Imports Remain High: Could Steel Companies Suffer?

Cleveland-Cliffs and US steel imports

Most of Cleveland-Cliffs’s (CLF) revenue is tied to its US (SPY) (SPX) iron ore segment. The segment supplies iron ore pellets to domestic steelmakers, which is their main raw material. It is therefore important for investors to keep an eye on the progression of imported steel into the market. End consumers using imported steel in place of domestically produced steel impacts demand, and ultimately, price. Steelmakers AK Steel (AKS) and ArcelorMittal (MT) are two of Cleveland-Cliffs’s major clients.

US Steel Imports Remain High: Could Steel Companies Suffer?

Interested in AKS? Don't miss the next report.

Receive e-mail alerts for new research on AKS

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

Imports rose in August

US steel imports rose YoY (year-over-year) in August for a tenth month. According to preliminary data released by the AISI (American Iron and Steel Institute), the United States imported ~3.3 million tons of steel in August 2017. While this is an increase YoY, it is a drop of 4.8% month-over-month. For the first eight months of the year, imports were 20.7% higher than in same period of the year prior. Imported steel has a market share of 28% YTD, significantly above the 20% most market participants consider normal.

Steel companies’ lower-than-expected guidance

Higher-than-expected steel imports have also affected domestic steelmakers’ future guidance. Nucor (NUE) and Steel Dynamics (STLD) recently released their 3Q17 earnings, which were lower than expected. They cited higher imports as one of the reasons for margin compression.

In August, steel executives wrote a letter to Trump, stating the need for urgent action. A favorable and speedy decision on the Section 232 probe could go a long way in pushing US steel stocks higher.

X

Please select a profession that best describes you: