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CLF’s CEO on Donald Trump’s Potential Impact on the Steel Sector

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Dec. 28 2016, Updated 4:05 p.m. ET

Trump factor versus CLF

Cliffs Natural Resources’s (CLF) CEO, Laurenco Goncalves, has always been vocal about the subsidized steel products entering the US market and the consequent woes of the US steel industry.

While the situation had already started changing in the beginning of 2016, several trade rulings increased the duties on dumped steel products, thereby protecting domestic steel players. Donald Trump’s win in the US presidential election seems to be serving as a further positive in this regard.

In Trump Factor Has Boosted Cliffs Natural Resources Stock 28%, we explored how Trump’s election could positively impact Cliffs and US steelmakers.

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Goncalves’s take

Goncalves seems to share this positive sentiment. On December 8, 2016, he noted, “If Mr. Trump implements a portion — he doesn’t need to implement everything—of what he is promising, not only will the country be a lot better after these things are implemented, but businesses like Cliffs and all steel mills in the United States will benefit very much.”

Trump announced that his administration would spend $1 trillion on infrastructure. He has also vowed to clamp down on trade cases and protect the steel sector from illegal and subsidized imports. Both factors are positive for the US steel sector (SLX). In turn, this could favorably impact companies such as U.S. Steel (X), AK Steel (AKS), and ArcelorMittal (MT).

Best-case scenario

Goncalves also noted that the current situation is the “best-case scenario.” On December 8, he added, “Everything that came since Mr. Trump became president-elect is all good, and adds to what we had before. So, even though I was not planning for that, I was planning for what I believe at this point was a worst-case scenario. So Trump is the best-case scenario.”

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