US steel imports
US steel imports have been falling gradually since the beginning of 2015. The downtrend continued in January 2016. US steel imports fell more than 41% year-over-year (or YoY) according to data released by the United States Census Bureau.
On its face, this looks like a very encouraging development for US-based steel producers. The steep decline in January steel imports was preceded by a 30% YoY decline for three consecutive months. Overall, US steel imports fell 13% in 2015 compared to the previous year.
2015 steel imports
However, January 2016 trade data should be taken with a grain of salt. In January 2015, US steel imports were near record highs at ~4 million metric tons. Then steel imports started to taper down, as you can see in the above graph.
Imports have risen over December
Compared to December 2015, January steel imports have actually risen. January imports represent a 10% month-over-month (or MoM) rise. However, some of this rise could also be due to typical seasonality, as imports generally fall in December. January steel imports have risen on a MoM basis for the last nine consecutive years by an average of 26%. The MoM increase in January’s steel imports is actually less compared to previous years.
You could argue that the MoM increase in January steel imports, which is less than previous years, is a positive sign for US steelmakers. These companies include United States Steel Corporation (X), Timken Steel (TMST), and Commercial Metals Company (CMC). However, to get a better sense of January steel imports, you should also look at the product-wise breakdown. In the next part of the series, we’ll look at the breakdown of January steel imports data.
Investors who want to avoid the hassles of picking individual stocks can consider the SPDR S&P Metals and Mining ETF (XME). Currently, XME has invested almost half of its holdings in US-based steel companies. Reliance Steel & Aluminum (RS) forms 4.7% of XME’s portfolio.
In the next part, we’ll take a look at rising HRC (hot-rolled coil) steel imports.