US Steel Imports Fell in February: What’s the Outlook?



US steel imports fall in February

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

According to the data released by the American Iron and Steel Institute (or AISI), imports for the first two months of 2018 declined 5.3%, compared to the same period last year. Imports in February 2018 were down 18% sequentially and 13% year-over-year (or YoY). While the Trump administration has exempted more countries from steel tariffs than was originally anticipated, 25% tariffs should drive down imports even more in the coming months.

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Imports to stabilize?

While we could also see an increase in imports from the exempted countries, the possibility looks quite low. According to the presidential proclamation, “The Administration will closely monitor imports of steel and aluminum imports from exempted countries, and the United States Trade Representative, in consultation with the Secretary of Commerce and the Director of the National Economic Council, may advise the President to impose quotas as appropriate.”

The current exemptions aren’t permanent and are valid only through May 1, 2018.

Encouraged by the tariffs, U.S. Steel (X) had announced the restart of its Granite City plant. Nucor (NUE) also announced a new rebar mill.

Increasing imports’ market share

The market share of imported steel in the United States has also declined recently. The market share, which had reached 27.0% in 2017, is down to 24% in February and 25% year-to-date. While this market share is still higher than the 20.0% level, which is considered normal, tariffs should be able to push it down further.

In the next part of this series, we’ll look at how US steel production is progressing and how steel tariffs could impact production.


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