Steel Prices: US Steel Producers Cautiously Optimistic About 2017
Optimism is running high for steel producers in 2017 following the upside momentum in 2016 that is expected to spillover into 2016.
US steel companies saw their stock values soar in 2016 amid the American government’s moves to protect domestic producers while the upside was given extra impetus from Donald Trump winning the US election.
Prior to 2016, the US steel market had been depressed for years due to lower demand and increased competition for domestic producers as the flood of cheap imported steel took over domestic producers’ market share. Domestic steel producers filed complaints with the US International Trade Commission and many of these complaints were found to be with merit. The Trade Commission found that many countries were unfairly subsidizing their domestic steel producers, enabling them to import steel into the US at prices domestic companies simply could not compete with. Heavy duties and tariffs were implemented on some imports. For example, Chinese steel imports had duties as high as 500% slapped on them.
The investigations are not over. On Friday, the US International Trade Commission said it found harm to US producers from imports of certain carbon and alloy steel cut-to-length plate from Brazil, South Africa and Turkey.
Meanwhile, US steel production retreated in 2016. The US produced 87.9 million tons of steel in 2016, 0.5% lower than the 88.4 million tons made the previous year when output had declined 10.5% from the prior year. In 2015 the steel import crisis dented domestic steel demand, and the latest production data suggests the import crisis is stabilizing.
The US government’s moves to level the playing field for steel prices will continue to support the steel market in 2017, while there are hopes that Donald Trump will make good on his campaign promise for infrastructure spending, boosting demand for steel.