On a relative basis, Cliffs Natural Resources (CLF) has outperformed other iron ore miners by a wide margin. It had a YTD rise of 182% as of April 19, 2016.
US steel imports have been falling gradually since the beginning of 2015. The downtrend continued in January 2016, when US steel imports fell more than 41% YoY.
An encouraging development in AK Steel’s 3Q15 financial performance was strong EBITDA of $120 million. This is the highest quarterly EBITDA in more than six years.
Looking at steel demand indicators, we see that construction activity has generally been strong in 2015, with spending in the United States exceeding $1 trillion for seven consecutive months.
If China doesn’t cut its aluminum smelting capacity meaningfully, aluminum might suffer the same fate as steel. US steel companies have been reeling under the impact of steel imports for quite some time.
May construction spending data, released on June 1, came in at a SAAR of $1.04 trillion. This is the second straight month where construction spending has passed $1 trillion SAAR.
A massive increase in steel imports has been the single biggest risk for the US steel industry. U.S. Steel faces challenges in its tubular segment also.
Property prices have also been weak in China. New home prices have fallen in 66 out of 70 top Chinese cities and in January, prices had fallen in 64 cities.
A low capacity utilization rate increases competition between existing industry players. This pressures steel prices as producers try to increase sales.
