Donald Trump’s policies
There was a stark contrast between the publicly stated energy policies of Donald Trump and Hillary Clinton during the US presidential campaign season. Clinton, like President Obama, claimed to be a big advocate of renewable energy, boasting that there would be 500 million solar panels by 2020 if she were to be elected. On the other hand, Trump claimed that he would throw his weight behind coal and shale gas.
Bearish coal stance
Clinton was also expected to continue with Obama’s so-called “war on coal.” We should note that steelmakers like U.S. Steel (X), ArcelorMittal (MT), and AK Steel (AKS) use coking coal as a raw material for their blast furnaces, and Clinton’s bearish stance on coal producers (TCK) could have had a negative impact on steelmakers, especially when seaborne coal prices have more than tripled this year.
U.S. Steel’s Tubular segment
In particular, U.S. Steel’s Tubular segment has posted massive losses for the past few quarters, as you can see in the graph above. Demand for tubular goods that are used by the energy industry has nosedived as new exploration activity has been hit due to lower energy prices (XLE).
Trump’s apparent support of nonrenewable energy would likely be positive for U.S. Steel, and the new President’s support for the Keystone XL pipeline, of course, could boost demand for U.S. Steel’s tubular products. However, it’s important to remember that last year, Republicans blocked an amendment that required only US-made steel be used in the pipeline.
While Donald Trump could help stimulate US steel demand with his infrastructure spending plans, he’ll likely face roadblocks in the US Congress in acting against steel imports. We’ll discuss this further in the next and final part of this series.