Like Wilbur Ross, President Trump Now Finds US Steel Prices High

US steel prices

In an interview with the Wall Street Journal, President Trump said that US steel prices are “a little more expensive.” However, according to Reuters, Trump also said that “the 25 percent tariffs on steel will rescue an industry important to U.S. national security.” He added that after the Section 232 tariff implementation, the competition in the US steel industry would be “internal, like it used to be in the old days when we actually had steel, and U.S. Steel was our greatest company.”

Like Wilbur Ross, President Trump Now Finds US Steel Prices High

Wilbur Ross

Previously, Commerce Secretary Wilbur Ross also spoke out against rising steel prices. On June 20, Ross told the Senate Finance Committee that “there has been a lot of speculative activity, storing inventory, [and] withholding product from the market by various intermediary parties, so the price of steel, and for a while the price of aluminum, went up far more than is justified by the tariffs,” according to S&P Global Platts. Ross added that “there is no reason for tariffs to increase the price of steel by far more than the percentage of the tariffs, and yet, that is what is happening.”

While US steel companies like U.S. Steel (X) and AK Steel (AKS) benefit from higher steel prices, several downstream metal users including Ford (F) and the Coca-Cola Company (KO) have listed higher metal prices as a headwind during their second-quarter earnings calls. Higher metal prices coupled with rising energy and labor costs have been a concern for the US industrial sector (DIA) this year.

US steel prices have started to moderate. We could see further softening in US steel prices in the near term. Read The Steel Industry’s Midyear Review: Outlook Gets Murky to see what could drive US steel stocks in the second half of the year.