US steel companies filed a series of trade cases last year to stem the flow of imported steel products into the United States. State support to steel mills in countries such as China and India has been cited often as a reason US steel companies are finding it hard to compete. It looks like steel companies aren’t wrong about pegging steel imports as their biggest challenge. US steel imports reached alarmingly high levels in late 2014 and continued to remain at elevated levels in 2015.
US steel companies have had their share of victories in their battle against unfairly traded steel products. Preliminary duties have been imposed on three key steel product categories: hot rolled, cold rolled, and corrosion-resistant steel products. US steel imports have been falling gradually since the beginning of 2015 as can be seen in the graph above.
The downtrend in steel imports continued in February 2016. US steel imports fell ~40% year-over-year (or YoY) according to the preliminary data released by the United States Census Bureau. This was preceded by a 41% YoY decline in January as well. February steel imports are the lowest since December 2011.
Falling steel imports have been among the biggest reasons for the optimism in the US (VTI) steel industry. Steel companies have raised their spot selling prices as import pressure has subsided. Higher steel prices will boost the earnings of steelmakers like U.S. Steel (X), AK Steel (AKS), Nucor (NUE), and ArcelorMittal (MT).
Having said that, can US steel imports continue to fall amid a supply glut in international markets? We’ll explore this aspect in the next part of the series.