Earlier in the year, the Trump Administration ordered a probe under Section 232 of the Trade Expansion Act of 1962 to investigate whether steel imports threaten US national security. The 270-day deadline for the probe’s findings will end in mid-January. Meanwhile, US steel imports have refused to die down despite the ongoing probe. Steel imports have actually risen this year.
While releasing its 4Q17 earnings guidance, Nucor (NUE) said, “Imports continue to negatively impact the U.S. steel industry. Through the first ten months of 2017, total steel imports have increased an estimated 19.4% compared to the same period last year. Additionally, finished steel imports accounted for an estimated 28% share of the U.S. market in the first ten months of 2017.”
US steelmakers have been quite vocal against imports. They used all of the remedies available under existing laws. There have been momentary drops in imports after a successful trade case followed by imports substituted from new locations. In last year’s flat-rolled case, imports started to flow in from new locations after major suppliers including China and South Korea were named in the trade case.
While the demand environment looks reasonably good as we head into 2018, US steelmakers need some support from the Trump Administration in curbing steel imports (MT). Most US steel producers, including U.S. Steel Corporation (X) and AK Steel (AKS), are optimistic that the Section 232 probe could help address the higher steel import situation.
Next, we’ll discuss Steel Dynamics’ (STLD) 4Q17 earnings guidance.