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No Decline in US Steel Imports despite Section 232 Threat

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US steel imports

Higher steel imports have been a concern for steelmakers, including U.S. Steel (X), AK Steel (AKS), and ArcelorMittal (MT). It was thus no surprise when steel stocks rallied after Donald Trump was elected president of the United States (SPY) (SPX-INDEX). The markets expected Trump to act against steel imports. The Trump administration did order a probe under Section 232 of the Trade Expansion Act of 1962 to see whether steel imports threaten US national security. A similar probe was also ordered into aluminum imports.

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Section 232 probe

While the findings of the Section 232 probe are still pending, the threat of strict action doesn’t seem to deter steel importers. US steel imports stood at 3.5 million metric tons in June 2017, according to preliminary data from the United States Census Bureau. That’s the highest on record since January 2015.

Imports climb

US steel imports have registered a double-digit yearly increase for five consecutive months. They’ve risen almost 20.0% year-over-year in the first six months of 2017. John Ferriola, Nucor’s (NUE) CEO (chief executive officer), noted during the company’s 2Q17 earnings call, “Through the first half of 2017, finished steel imports have increased an estimated 15% compared to the same period last year. The estimated finished steel import market share in the months of June 2017 was 29%, matching the record annual level set in 2015. The year-to-date market share for finished steel imports stands at approximately 27%.”

Simply put, US steel imports have refused to die down and, on the contrary, have been slowly inching upward despite the threat of some action under the Section 232 probe. Meanwhile, steel companies seem to have toned down their expectations for the Section 232 probe, as we’ll see in the next part.

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