Section 232 investigation findings
Earlier in February, the US Commerce Department released the recommendations of its Section 232 imports probe. The investigations were separately initiated in 2017 to determine whether aluminum and steel imports threaten US national security.
In January, the US Commerce Department submitted its findings to President Trump, who has to decide on any potential action by mid-April.
The Section 232 findings triggered a buying spree in steel stocks (XME). U.S. Steel (X) was the biggest gainer in steel space on February 16 and the stock saw an upward price action of 14.8%, while AK Steel (AKS) rose 13.8%. Cleveland-Cliffs (CLF), which supplies iron ore to US steel companies, saw its market capitalization rise 7.6%.
While there was a broad-based euphoria in the steel space, aluminum stock reactions to the Section 232 findings have been mixed. Century Aluminum rose 8.3% on February 16 while Alcoa (AA) closed at $47.36 on that day—a loss of 0.44% from its previous day’s closing. Although the stock made an intraday high of $50.18 on February 16, it couldn’t hold onto its gains. (Check out Will Tariffs make US Aluminum Producers Again? to see how the Section 232 recommendations, if implemented, would impact US aluminum markets.)
While the US Commerce Department wants to take broad action against steel imports, the US Defense Department seems to favor targeted action. But although there’s a sense of jubilation among steel producers, buyer groups are worried that tariffs could lead to higher steel prices.
In this series, we’ll look at the Commerce Department’s recommendations to President Trump and assess how these recommendations could impact US steel markets.
Let’s begin by analyzing why steel imports have been a challenge for US steelmakers.