Cliffs Natural Resources: US Steel Imports Outlook



Cliffs and US steel imports

Cliffs Natural Resources’ (CLF) USIO (US Iron Ore) segment mainly sells iron ore to integrated steel companies in the United States and Canada.

Higher US steel imports have negatively impacted CLF’s customer orderbooks and pricing. That’s why it’s important for Cliffs investors to keep track of steel import penetration in the US market.

Cliffs’s CEO (chief executive officer) Lourenco Goncalves said during the Goldman Sachs (GS) conference on November 16, 2016, that the percentage of domestic steel on the market was close to 70.0%. The goal, he said, was about 80.0%.

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Imports fell in 2016

According to preliminary data released by the United States Census Bureau, the United States imported 2.2 million metric tons of finished steel products in December 2016. In 2016, total imports were 26.3 million tons of finished steel. That’s a 16.4% fall year-over-year.

Since May 2015, US steel imports have fallen an average of 18.0% YoY (year-over-year) each month. Falling steel imports provided much-needed pricing power to US steelmakers such as United States Steel (X), AK Steel (AKS), and Nucor (NUE).

Limiting steel imports

Some US companies have filed trade cases against unfairly traded steel in the United States. That caused duties on imported steel to rise significantly. The rise has minimized the incentive for US steel buyers to import steel products.

Going forward, steel imports into the United States are expected to be restricted due to President Donald Trump’s protectionist policies.

In the next part of this series, we’ll take a look at the recent trend in US steel (SLX) production.


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