US Steel Imports Rose in January, Don’t Blame China!

  • US steel imports rose on a monthly basis in January. However, they fell on a YoY (year-over-year) basis. We’ll analyze the January data to see why imports rose. We’ll also discuss which product categories saw major changes in imports.

US steel imports

According to preliminary data released by the Census Bureau, the US imported 2.84 million metric tons of steel in January. The amount is twice as large as the imports in December. Notably, imports rose 84% month-over-month in January 2019 as well. Two factors contributed to the sharp rise in January imports. First, to get an exemption from President Trump’s Section 232 tariffs, countries like Brazil and South Korea agreed to quotas. Steel importers usually order more towards the beginning of the year. The quotas finish as the year progresses. Second, there has been increased US production this year. Last year, inventory destocking had a negative impact on demand. Inventory destocking hit domestic mills’ shipments, especially in the fourth quarter.

Semi-finished steel imports rose

If we look at the break-up, semi-finished steel imports, which include blooms, billets, and slabs, rose from 0.2 million metric tons in December 2019 to 1.36 million metric tons in January 2020. While overall imports fell almost 10.0% on a YoY basis, semi-finished product imports rose more than 46% during this period. The YoY rise in imports might be due to higher apparent domestic demand. We should remember that semi-finished products are processed more to produce finished steel.

China isn’t the culprit!

Imports from Brazil rose from 0.76 million metric tons in January 2019 to 1.14 million metric tons in January 2020. Brazil didn’t export much steel to the US in December 2019. The country’s quotas for tariff-free imports finished. Brazil mainly exports semi-finished steel products to the US. Interestingly, domestic mills like U.S. Steel Corporation (NYSE:X) and Nucor (NYSE:NUE) blame China for the domestic industry’s woes. However, China only exported about 24,000 metric tons of steel to the US last month—down from around 70,000 metric tons in January 2019. China accounted for less than 1.0% of the total US steel imports last month.

Finished products

Looking at finished products, imports of HRC (hot-rolled coil) and galvanized steel rose 5.3% and 56% compared to December. However, CRC (cold-rolled coil) imports were similar to December. Imports of HRC, CRC, and galvanized steel fell 15.6%, 18.9%, and 8.9% YoY, respectively, in January. OCTG (oil country tubular goods) imports rose 9.6% compared to December but fell by 62% on a YoY basis. The energy industry uses OCTG products. Rebar imports more than doubled compared to December but fell 21% compared to January 2019. Rebars are used in non-residential construction.

Trump’s Section 232 steel tariffs

While there has been a structural fall in imports due to Trump’s Section 232 tariffs, steel stocks have sagged in the US. In 2018 and 2019, China’s slowdown concerns and the US-China trade war hit the metal and mining sector. When things started to look on track towards the end of 2019, uncertainty about the coronavirus hit the sector. Read Coronavirus Impacts US Steel Companies Frail Recovery to learn more.