uploads/2016/10/part-2-imports-1.png

Would U.S. Steel Benefit from Lower Steel Imports?

By

Updated

Steel imports

Lower imports have been a key driver of the recovery in US steel prices this year. Therefore, it’s important for steel investors to follow monthly steel import data releases. They serve as a virtual health check for the US steel industry (XME). In this part, we’ll provide a detailed analysis of September’s steel imports. We’ll analyze what these figures mean for steel companies like U.S. Steel (X), ArcelorMittal (MT), and Nucor (NUE).

Article continues below advertisement

Imports decline

According to preliminary data released by the U.S. Census Bureau, the country imported 2.48 million metric tons of steel products in September. It represents a YoY (year-over-year) fall of about 4%. Steel imports have fallen on a monthly basis for two consecutive months after they hit a one-year high in July. Lower steel imports are positive for US steel producers (XME).

Key drivers

As the spread between US and international steel prices narrowed in some steel product categories like HRC (hot-rolled coil), there isn’t much incentive for US steel buyers to look for import offers. Notably, we saw a steep fall in HRC imports in September. Imports fell to ~217,000 metric tons in September—a YoY fall of 14%. Imports also fell on a monthly basis.

CRC (cold-rolled coil) imports fell on yearly as well as a monthly basis. However, galvanized steel imports rose in September. Notably, the spread between US and international HRC prices narrowed. It’s still significant in CRC and galvanized steel products.

Meanwhile, some steel producers like AK Steel (AKS) recently announced price hikes. In the next part, we’ll see how these price hikes are playing out.

Advertisement

More From Market Realist