25 May

Have President Trump’s Tariffs Failed US Steel Companies?

WRITTEN BY Mohit Oberoi, CFA

Steel tariffs

As noted in the previous part, US steel imports have risen sharply in the last two months despite President Trump imposing the Section 232 tariffs. Looking at product specific action, rebar imports more than doubled last month. Nucor (NUE) is investing in new rebar capacity. Earlier this year, Commercial Metals Company (CMC) acquired some of Gerdau’s (GGB) US rebar mills.

Have President Trump’s Tariffs Failed US Steel Companies?

Notably, the industrial sector has lagged some of the other sectors in 2018. The SPDR Dow Jones Industrial Average ETF (DIA) is trading flat for the year. DIA has underperformed most of the broader market ETFs in 2018.

Flat-rolled imports

In the flat-rolled space, HRC (hot-rolled coil) imports rose more than 44% YoY (year-over-year). HRC imports have risen more than 40% YoY for three consecutive months. The imports in April were the highest level since July 2016. US HRC prices have risen sharply this year. While higher prices lowered the HRC-CRC (cold-rolled coil) spreads in US markets, there were higher spreads between US and international HRC prices.

Galvanized steel and CRC imports also rose on a yearly basis last month. AK Steel (AKS) has a high percentage of CRC and galvanized steel in its product mix. Meanwhile, OCTG (oil country tubular goods) imports fell on a yearly basis. However, the imports rose on a sequential basis. U.S. Steel Corporation’s (X) Tubular segment produces OCTG products.

Have tariffs failed?

Have President Trump’s steel tariffs failed US steel companies? Imports have risen sharply since the tariffs were finalized. Well, not exactly. However, the US still needs to negotiate quotas with exempt countries. In the absence of quotas, US steel imports could stay at elevated levels.

Next, we’ll see how the Section 232 exemptions could play out.

Latest articles

With over 38,000 restaurants, McDonald's doesn’t make any of its products. Instead, it contracts with suppliers to meet its massive requirements.

In Q3, T-Mobile’s (TMUS) strong momentum continued. The telecom giant gained postpaid phone customers and reported strong earnings.

Energy Transfer stock (ET) has been under pressure due to a weak earnings season from MLPs, but its fundamentals are stronger than ever.

Former HBO CEO Richard Plepler is in "advanced talks" over a deal with Apple TV+ (AAPL), the Wall Street Journal reported on Tuesday.

At 11:46 AM ET, US crude oil prices were up 0.7% from the last trading session. The EIA plans to release its inventory report tomorrow.

Footwear and apparel giant Nike (NKE) has decided to stop selling its products on Amazon (AMZN), ending a program that's run since 2017.