US steel companies
US steel stocks have looked strong so far this year following a dismal 2018. If we consider the way steel markets looked at the beginning of 2018, we’ll find that US steel companies didn’t really need President Donald Trump’s support at that time. Steel markets were looking strong in the United States and around the world, with both steel and steelmaking raw materials looking robust. Steel demand was also strong, while the supply side of the equation looked supportive given China’s capacity curtailments.
However, the picture has changed for the steel industry. Globally, as well as in the United States, steel demand isn’t as strong as it was at the beginning of 2018. Steel prices have nosedived amid demand concerns. In the United States, key steel end users, such as the construction and automotive sectors, have shown signs of moderation.
Speaking of US steel producers such as U.S. Steel Corporation, (X), AK Steel (AKS), and Nucor (NUE), they don’t really need much support from the administration when steel markets are strong. However, when steel markets are weak globally and relatively strong domestically, like they are now, US steel markets see an influx of imports. To add to this, US steel producers are adding capacity. If imports don’t fall more from these levels, more domestic capacity could depress steel prices (CLF) (XME). From a demand perspective, US steel companies will be banking on any infrastructure plans to boost demand.
Simply put, US steel producers need President Donald Trump much more now than they did last year. With that said, the Trump administration hasn’t gone back on its support for the domestic steel industry and has been pitching quotas for Section 232 exemptions.
Will President Trump’s tariffs benefit the US steel industry in the long term? Read Will Trump’s Steel Tariffs Fail Like Bush’s Tariffs? to know more.