US steel stocks were among the biggest gainers in 2016, as Donald Trump’s election helped fuel a rally on expectations of higher demand and supportive trade policies. President Trump has delivered on his pre-election pledge of saving the US steel industry.
Earlier this year, Trump imposed tariffs on steel imports. These tariffs were imposed after the US Department of Commerce’s investigation found that steel imports are a threat to US national security.
Hardening his stance on trade issues, Trump refused to extend the exemption for NAFTA and the European Union beyond May. The Section 232 tariffs have propelled US steel prices to multiyear highs. Please read How Tariffs Have Altered the US Steel Industry to find out how tariffs have changed the US steel industry’s competitive landscape.
Despite the tariffs, US steel stocks, with the exception of Steel Dynamics, have sagged this year. U.S. Steel Corporation (X), Nucor (NUE), and ArcelorMittal (MT) are trading with single-digit YTD (year-to-date) gains. AK Steel (AKS) is trading at a YTD loss.
Last week, Nucor and Steel Dynamics (STLD) released their second-quarter earnings guidance. In this series, we’ll analyze these companies’ guidance in detail. We’ll also look at other steel companies’ earnings estimates, and we’ll see how analysts view the US steel industry.
Let’s begin by looking at Steel Dynamics’ earnings guidance.