Free Demo

Exim News

Steel Import Drops: Will U.S. Players Survive Tariff Waivers?

28-Mar-2018
Steel Import Drops: Will U.S. Players Survive Tariff Waivers?

Much to the respite of American steel makers, U.S. steel imports have dropped roughly 5% year to date – according to the latest report from the American Iron and Steel Institute (AISI), an association of North American steel makers.
    
Per AISI, based on preliminary U.S. Census Bureau data, total domestic steel imports went down 18% on a monthly comparison to roughly 2.36 million net tons in February. Finished steel imports for the same month also fell 17.6% from a month ago to around 1.92 million net tons. This follows a 17.3% and 23.8% increase in total and finished steel imports in January, respectively.

Year to date (through first two months of 2018), total and finished steel imports are down 5.3% and 3.5% year over year, respectively. Finished steel import market share was estimated at 25% year to date.

Major finished steel products that have showed a significant decrease in imports on a monthly comparison basis in February include reinforcing bars (down 58.8%), oil country goods (down 37.6%), standard pipe (down 28.5%), line pipe (down 27.4%), sheets & strip all other metallic coatings (down 25.9%) and hot rolled bars (down 22.9%).

The biggest offshore suppliers for February were South Korea with 277,000 net tons (down 18% from January), Germany with 116,000 net tons (up 28%), Japan with 90,000 net tons (down 37%), Taiwan with 75,000 net tons (down 36%) and China with 60,000 net tons (down 16%).

A Reprieve for U.S. Steel Mills

U.S. steel producers have suffered heavily due to high levels of cheap steel imports, reflected by declined orders, idling of mills and layoffs across the nation. The continued surge of steel imports into the United States hollowed out much of the domestic steel industry last year.

Imports of cheap steel continued to make inroads into the American market in 2017 despite a raft of stringent trade actions and threats of further future measures. Subsidized steel products are being illegally dumped by foreign steel producers in the American market at unfairly low prices that significantly undercut the prices of U.S. steelmakers.

Although the U.S. Department of Commerce made several ruling imposing duties on additional steel products, imports refused to abate last year due to foreign producers’ overcapacity. Moreover, a delay in Section 232 investigation on steel imports by the U.S. Department of Commerce also triggered a spike in steel imports in 2017.

Total steel imports shot up roughly 15% in 2017, according to the AISI. While the levy of heavy tariffs led to a decline in steel exports from China to the United States, imports from other countries kept flowing into the American markets. These cheap imports hurt the margins of American steel players last year. As such, a slowdown in imports (as reflected by the latest data) is a welcome relief for the crisis-hit U.S. steel makers.

 
But Trump’s Softening Tariff Stance is a Worry
U.S. steel makers have been pinning their hopes on President Donald Trump imposing broad-based tariffs on imported steel that would provide a boost to steel prices and give them more pricing power.

Steel stocks got a shot in the arm on Mar 1 after President Trump said that the U.S. will impose a 25% tariff on steel imports and 10% tariff on aluminum imports in a big move to protect the domestic producers of these metals. Expectations of an across-the-board tariff on steel imports provided a thrust to shares of major American steel makers.

However, the initial euphoria fizzled out after the President signed executive orders on Mar 8 imposing tariffs on steel and aluminum imports while excluding U.S. allies Canada and Mexico (together represent roughly a quarter of U.S. steel imports) from the tariff orders. Moreover, the orders included provisions for other countries to apply for exemptions provided their imports do not hurt the U.S. economy.

The President noted that Canada and Mexico represent “a special case,” and will continue talks with them to address concerns. The exemptions are dependent on the outcome of the North American Free Trade Agreement (NAFTA) renegotiation talks that are underway.

Shares of major U.S. steel makers including U.S. Steel Corp. (X - Free Report) , Nucor Corp. (NUE - Free Report) , AK Steel Holding Corp. (AKS - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and Commercial Metals Company (CMC - Free Report) tumbled after Trump signed the tariff orders. The selloff was triggered by the concessions made by the President in the tariff order by excluding two main sources of U.S. imports while leaving room for other nations to negotiate exclusions from the tariffs.

Adding to the worries, the Trump administration on Mar 22 said that it would temporarily exempt more countries from steel and aluminum tariffs. The list includes the European Union (EU), Argentina, Australia, Brazil, Canada, Mexico and South Korea, many of which have been in talks with the United States to win an exemption. The news sent U.S. steel stocks reeling with shares of U.S. Steel and Commercial Metals being hit the hardest.

U.S. Steel, Nucor, Steel Dynamics, AK Steel and Commercial Metals each carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

President Trump’s move to exclude the EU – a major source of steel imports – from the tariff orders appears to avert a potentially fierce trade war with the 28-nation bloc. The EU had threatened to impose tariffs on Harley-Davidson motorcycles and other iconic U.S. brands in retaliation to the U.S. tariff move. The bloc recently published a list of U.S. products worth around $3.4 billion on which it plans to impose trade penalties.

The Trump administration’s gradually softening tariff stand is bad news for the domestic steel makers. More countries may seek exemptions for steel imports in the future that cannot be made in the United States. This may thwart the administration’s efforts to curb the influx of cheaper imports and eventually hurt steel prices.
 
Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

Source:-Zacks.com

High-volume of Loyal and Trusted Customers!

We feel pride in offering our customers the wide range of products of the top leading brands of the world.

Fill Your Requirements of Import Export Data and Get Free Sample Report

We do not provide any assistance directly selling or Buying any product.

Top