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Checking Up on the Steel Industry’s Supply Equation in 2018

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Mar. 2 2018, Published 3:00 p.m. ET

Steel supply

February was a volatile month for US steelmakers (XME). It started on a weak note as the broader market sell-off that began in the last week of January continued into February. However, steel stocks gained momentum as the month progressed. Improved sentiment in broader markets certainly helped steel companies’ price action, but the key driver was the Section 232 recommendations. We again saw some selling pressure as the month drew to a close, though.

Looking at different steel names, we see that U.S. Steel Corporation (X) and AK Steel (AKS) respectively gained 16.3% and 1.9% last month. ArcelorMittal (MT) and Nucor (NUE) respectively lost 2.3% and 6.5% in February.

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Section 232 recommendations

The Trump administration initiated a Section 232 probe last year to investigate whether steel imports threaten US national security. The Commerce Department submitted its report to President Trump in January, but the findings were kept under wraps. Last month, the Commerce Department released its recommendations. It has given President Trump three options to curb US steel imports. One option calls for a flat 24% tariff on all steel imports. See Has the Section 232 Investigation Opened Pandora’s Box? to find out how the recommendations, if implemented, could impact the US steel markets.

Series overview

Steel prices, like other commodities, are driven by the underlying supply and demand dynamics in the long term. In this series, we’ll see how steel supply is shaping up in the United States as well as globally.

Speaking of US markets, we’ve found that domestic demand is met with production from domestic steel mills and steel imports. In the next part of this series, we’ll see how US steel imports look at the beginning of 2018.

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