Steel industry indicators
We’ve seen a lot of action in the steel space this year. In March, President Donald Trump imposed Section 232 tariffs on steel imports. The tariffs were subsequently watered down, and almost two-thirds of the imports were temporarily exempted from the tariffs. However, last month, Trump hardened his stance and refused to extend the exemptions for NAFTA[1. North American Free Trade Agreement] countries and the European Union.
Steel tariffs have changed the US steel industry’s competitive landscape. The benchmark spot HRC (hot rolled coil) prices have skyrocketed to a decade high, riding on the Section 232 tariffs. The spike in steel prices is expected to support steel companies’ earnings this year.
Earlier this month, Nucor (NUE) and Steel Dynamics (STLD) both announced better-than-expected second-quarter guidance. AK Steel (AKS), ArcelorMittal (MT), and U.S. Steel Corporation (X) are also expected to post higher earnings in the coming quarters.
The sharp rise in US steel prices even has Wilbur Ross, the United States Secretary of Commerce, worried. The United States Department of Commerce is now investigating whether some market participants are illegitimately profiteering after the Section 232 tariffs.
In this series, we’ll take a look at the recent steel industry indicators. We’ll cover the domestic as well as international steel industry indicators. These indicators could help us understand how the US steel industry is fundamentally placed.
Let’s start by looking at the recent trend in US steel imports.