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CLF: US Steel Imports Surged 15% in 2017—Will 2018 Differ?

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US steel imports rose in 2017

The US iron ore segment contributes to the majority of Cleveland-Cliffs’ (CLF) revenues and earnings. Cliffs investors track imports data, which directly impact Cliffs’s customers such as AK Steel (AKS).

Despite Donald Trump’s resolve to protect the domestic US steel industry from the onslaught of subsidized imports, they were broadly on an uptrend in 2017. On an annual basis, imports rose every month from November 2016 to October 2017. For the last two months of 2017, however, imports fell on a year-over-year (or YoY) basis.

According to the preliminary data from the American Iron and Steel Institute (or AISI), the imports for December 2017 totaled 2.45 million tons, down 11.4% sequentially. For 2017, imports came in at 38.12 million tons, up 15.4% YoY.

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US steelmakers’ urge to the administration

Increasing US steel imports have negatively impacted the pricing power of US steelmakers (SLX). Companies such as ArcelorMittal (MT), US Steel (X), and Nucor (NUE) have been demanding that the US government take immediate action on the Section 232 probe into the US steel imports. Steelmakers have written a letter to the administration, stating, “We need strong action that meaningfully adjusts imports and restores healthy levels of capacity utilization and profitability to the domestic industry to ensure we can continue to produce the steel needed for our national security and critical infrastructure.”

Increasing imports’ market share

The market share of imported steel in the United States reached 27.0% in 2017. This market share is higher than the 20.0% level that most market participants consider normal.

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