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Global Slowdown Offset Trump’s Steel Tariffs in Q4

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Feb. 13 2019, Updated 7:31 a.m. ET

Global slowdown

Previously in this series, we discussed steel companies’ fourth-quarter shipments and 2019 guidance. In this part, we’ll discuss steel companies’ fourth-quarter ASP (average selling prices). The ASP drives steel companies’ (CLF) (SPY) performance and impacts their profitability. We saw a sharp rise in steel companies’ ASP in 2018 after President Trump’s Section 232 tariffs lifted US steel prices to multiyear highs. However, steel companies reported a sequentially lower ASP in the fourth quarter.

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Comparative analysis

  • Steel Dynamics’ (STLD) ASP fell 4.9% sequentially to $940 per ton. The company’s ASP fell the most on a quarterly basis among the steel companies that we’re covering in this series. Nucor’s (NUE) fourth-quarter ASP fell 1.6% sequentially. AK Steel’s (AKS) fourth-quarter ASP fell 0.7% sequentially. The company’s ASP fell the least in our coverage of steel stocks and was better than its guidance.
  • U.S. Steel’s (X) US flat-rolled ASP fell to $823 per ton in the fourth quarter. The company reported an ASP of $859 per ton in the third quarter. The company’s Tubular segment also reported a sharp decline in the ASP from $1,602 per ton in the third quarter to $1,488 per ton in the fourth quarter. However, U.S. Steel’s Europe ASP rose from $669 per ton in the third quarter to $686 per ton in the fourth quarter. ArcelorMittal’s (MT) fourth-quarter ASP fell to $768 per metric ton from $779 per metric ton in the third quarter.

Global slowdown

The global slowdown, especially China’s slowdown, took a toll on US steel prices in the fourth quarter. We saw a sharp fall in US steel prices in the fourth quarter despite President Trump’s tariffs. We could see another decline in steel companies’ ASP in 2019.

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