Yesterday, U.S. Steel (X) announced its second-quarter guidance. The guidance was lower than what analysts were expecting. Nucor (NUE) and Steel Dynamics (STLD) also released their second-quarter guidance earlier this week. AK Steel (AKS) provides annual guidance during its earnings release. US steel stocks have bounced back this month amid the uptrend in broader markets. The SPDR S&P 500 ETF (X) is up 6.2% this month. The metals and mining sector has outperformed SPY in June.
Meanwhile, while U.S. Steel’s guidance spooked markets, the company also announced plant closures. U.S. Steel will be shutting two blast furnaces in the United States and one in Europe. U.S. Steel’s plant closure announcement couldn’t have come at a worse time for President Trump, who started his 2020 campaign yesterday. Trump has said multiple times that his tariffs have revived the US steel industry and supported steel jobs. Last year, U.S. Steel restarted the Granite City blast furnace, aiming to capitalize on higher steel prices after tariffs. President Trump visited the facility after the restart.
Over the last year, there has been a flurry of new investments and restarts in the US steel industry. President Trump has cited the revival in the US steel industry to highlight the success of Section 232 tariffs. However, 15 months after tariffs, things seem to have come a full circle for US steel producers. US steel prices are now way below March 2018 levels when Trump announced the tariffs. Furthermore, after multiple growth projects, we’re now seeing capacity curtailments.
After U.S. Steel’s plant closures, critics could harp on the fact that Trump’s steel tariffs have been a failure. But have the tariffs really failed in their objectives? Read What Section 232 Steel Tariffs Have Achieved in the Last Year for more insight.