Steel imports in 2015
The growth in steel imports in 2015 could be less spectacular. There are several reasons for this outlook. Let’s discuss them in detail. Please note that investors in the SPDR S&P Metals and Mining ETF (XME) should closely monitor steel imports.
China has a preferential tax policy for alloy steel products. A lot of steel producers in China started adding very low quantities of boron to standard steel products. This helped them classify these steel products as alloy steel.
Boron alloy steel accounted for around one-third of steel exports from China last year. Chinese authorities have now clamped down on this tax loophole. Steel exports from China increased in January, but analysts expect the impact of the new tax rules to have an impact in the coming months.
China also plans to close down some excess steel capacity this year. Massive overcapacity in China has been one of the major issues for the global steel industry.
Steel companies filled a record number of trade cases last year. They managed to get anti-dumping duty imposed in certain cases. As steel demand is expected to grow at a slower pace this year, steel companies should be more vigilant in filing trade cases.
Trade deal with Russia
Recently, the US scrapped a treaty with Russia for importing HR sheets. The full impact of this action should be visible this year. Steel companies like U.S. Steel (X) ArcelorMittal (MT), Nucor (NUE), and AK Steel (AKS) will benefit from this step.
Steel inventories have surged to record highs as a result of steel imports last year. We’ll discuss this change in detail in our next part.