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Can Higher Imports Slow US Steel’s Christmas Rally?

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Dec. 28 2016, Published 12:50 p.m. ET

High imports

US steel producers are enjoying a nice Christmas rally. Nothing seems to stop investors’ appetite for steelmakers. Even the Fed’s rate hike didn’t mean much for steel investors. While metal and mining shares witnessed selling pressure after the rate hike news came out, steel stocks actually closed with gains on December 14.

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Steel stocks are on a high

Steel stocks (XME) have been on a joyride since Donald Trump won the US election. We saw a sharp rise in steel stocks, including U.S. Steel Corporation (X), AK Steel (AKS), Nucor (NUE), and ArcelorMittal (MT), after the election.

The market’s reaction to the election results wasn’t really surprising given Trump’s stance on curbing imports and boosting US manufacturing. Read Weighing Trump’s Mettle: Will He be a Game Changer for US Steel? to find out what Trump’s presidency could mean for steel stocks.

Series overview

The US steel industry (XME) benefited from trade cases imposed on imports of flat-rolled steel products. Steel companies raised their base selling prices several times in 1H16. Falling imports provided US steel companies with pricing power in an otherwise commoditized industry.

Lower imports have been a key driver of US steel prices. 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. In this series, we’ll provide a detailed analysis of November’s steel imports. We’ll analyze what the figures mean for the sector.

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