Why President Trump’s China Visit Could Interest Steel Investors
Trump’s China visit
As part of President Trump’s extended trip to Asia, he plans to visit China on November 8. Notably, China’s trade data is expected on the same day.
During his presidential campaign, Trump had spoken out against China’s trade policies. He also floated the idea of a 45% tax on Chinese imports and criticized the country’s currency policies.
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US steel industry
The US steel industry also sees Chinese trade policies as a challenge for the global steel industry (STLD) (CLF). Steel executives have lamented the alleged subsidies received by Chinese steel companies as the prime reason they have difficulty competing on price with less expensive Chinese steel.
We’ve seen a steep decline in Chinese steel exports to the United States, and China currently accounts for only ~2% of US steel imports. Further, Chinese steel exports have also fallen steeply as the country has taken steps to address its massive steel overcapacity.
Section 232 probe
During Trump’s China visit, US steelmakers are expected to watch Trump’s views on China’s trade policies, especially with respect to any subsidies received by Chinese companies. The markets don’t expect any trailblazing concessions from China as far as its steel industry is concerned. However, it would be informative to follow the visit for broader cues on the Trump administration’s trade policies.
As part of his Asia tour, Trump also planned stops in Japan and South Korea. While tensions in the Korean Peninsula could be the focal point of Trump’s visit to these two countries, trade could be another key point of discussion.
South Korea and Japan are among the major steel exporters to the United States. These countries could face further challenges if the Trump administration takes tough action against steel imports under the Section 232 imports.
U.S. Steel (X) and AK Steel (AKS) have released their earnings, ArcelorMittal’s (MT) 3Q17 earnings are expected on November 10. In the coming articles, we’ll look at analysts’ estimates for ArcelorMittal’s 3Q17 earnings.