Steel industry midyear review
We are now halfway into 2018. After a strong start to the year, US steel stocks have pared their 2018 gains. AK Steel (AKS) is deep into the red for the year while U.S. Steel Corporation (X) and Nucor (NUE) are almost flat for the year.
ArcelorMittal (MT), the world’s largest steel producer, lost 10.7% in the first half of the year. Cleveland-Cliffs (CLF), which supplies iron ore to US-based steel producers, gained 16.9% over this period.
This has been an interesting year for the US steel industry. In March, President Trump imposed a 25.0% tariff on steel imports. The tariffs were subsequently relaxed for some countries. However, the temporary exemptions for NAFTA and the European Union weren’t extended beyond May.
Despite the Section 232 tariffs that were intended to protect the domestic steel industry from unfairly traded steel products, the markets haven’t warmed up to steel stocks, as is visible in their dismal 2018 price action. In this series, we’ll explore why US steel stocks are having a lackluster year despite President Trump’s efforts to revive the US steel industry. We’ll also see how US steel stocks are placed for the second half of the year.
Let’s begin by analyzing what’s been ailing US steel companies this year.