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US Steel Imports Down YTD as Industry Recovers from COVID Blues
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U.S. steel imports are down year over year for the first ten months of 2020 despite a spike in volumes on a monthly comparison basis in October — according to the latest American Iron and Steel Institute ("AISI") report.
Imports Rise in October But Remain Lower YTD
The association of North American steel makers noted that total domestic steel imports rose 19.6% from the previous month in October to roughly 1.5 million net tons. Finished steel imports also went up 6.6% to around 1.24 million net tons for the reported month.
Biggest volumes of finished steel imports from offshore for October were South Korea with 146,000 net tons (up 17% from September), Japan with 78,000 net tons (up 32%), Turkey with 68,000 net tons (up 943%), Germany with 67,000 net tons (up 31%), and Brazil with 34,000 net tons (up 5%), per AISI.
Meanwhile, total and finished domestic steel imports fell 22.8% and 25.9% year over year, respectively, year to date through the end of October 2020. The AISI noted that these figures are based on preliminary Census Bureau data.
The year-to-date drop in imports reflect the impacts of the coronavirus pandemic and 25% tariff on steel imports, which the Trump administration had levied in 2018 under Section 232 of the Trade Expansion Act of 1962.
According to AISI, finished steel import market share was estimated at 18% in October. That is up from 16% a month ago. For the first ten months of 2020, finished steel import market share was estimated at 18%.
For 2020, annualized total and finished steel imports are expected to be 23 million net tons (down 17.7% year over year) and 16.3 million net tons (down 22.4%), respectively, AISI noted.
Demand Revival, Price Upswing Put Industry Back on Its Feet
The U.S. steel industry has staged a recovery after being out of favor for much of the first half, thanks to a revival in demand in key end-markets from the coronavirus-induced slowdown and a rebound in steel prices.
The pandemic led to a sharp drop in demand for steel across major end-use markets such as construction and automotive during the first half. Moreover, a slump in crude oil prices hurt demand for steel in the energy space. The pandemic-induced demand shocks also forced U.S. steel mills to curtail production with capacity utilization dropping to a multi-year lows during the first half.
However, demand for steel has picked up with the resumption of operations across major steel-consuming sectors, following the easing of restrictions. The automotive industry has rebounded strongly following pandemic-led shutdowns on the back of a strong recovery in customer demand. Notably, major U.S. automakers are ramping up production to boost lean vehicle inventories at dealerships in the wake of surging demand. The automotive rebound is driving demand for flat steel products.
Moreover, the resumption of many projects, which were stalled earlier due to labor shortages and supply chain disruptions amid the pandemic is supporting the revival in the construction sector and driving demand for long and flat steel products in this major market.
Improved end-market demand has also helped U.S. steel industry capacity utilization rate to break above the 70% level after plunging to 51.1% in May — the lowest level in many years. U.S. steel production has also picked up on an improvement in capacity utilization.
Moreover, U.S. steel prices have gained strength from the virus-led slump on an uptick in demand. The benchmark hot-rolled coil (“HRC”) prices tumbled to below the $500 per short ton level in April on concerns over the fast-growing pandemic in the United States and demand slowdown amid production shutdowns by automakers. After gaining some traction during the second quarter, steel prices again came under significant pressure in July and August on demand weakness.
However, HRC prices started to recover in September and are on an upswing since then. Prices have surged past $700 per short ton on U.S. steel mills’ back-to-back price hike actions, tight supply and demand recovery.
According to SteelBenchmarker, the benchmark prices for hot rolled band steel hit $716 per net ton on Nov 25, up roughly 4% from $686 net ton two weeks ago.
Lead times for steel delivery at U.S. steel mills remain extended, indicating healthier demand. Improving demand coupled with supply constraints due to production disruptions and mill outages are likely to lend support to HRC prices through the final quarter of 2020.
Meanwhile, U.S. steel companies delivered strong results in the third quarter on a rebound in domestic steel demand. Nucor Corporation (NUE - Free Report) last month said that its non-residential construction markets were strong in the third quarter, benefiting its downstream products unit. Moreover, recovery accelerated in the automotive market on strong customer demand. Nucor sees sequentially higher earnings in the fourth quarter, mainly due to improved pricing at its sheet and plate mills.
Moreover, Steel Dynamics, Inc. (STLD - Free Report) benefited, in the September quarter, from a strong recovery in steel demand, especially in automotive, and also saw a rebound in flat roll steel spot prices. It envisions sustained customer demand and pricing strength through the remainder of 2020 and into 2021.
Strong demand in the automotive market along with a resilient construction market also helped United States Steel Corporation (X - Free Report) to deliver better-than-expected third-quarter results. The company is seeing strong order booking in automotive and expects the momentum to continue into 2021.
Olympic Steel, Inc. (ZEUS - Free Report) also saw a steady rise in volumes as the third quarter progressed with volumes approaching pre-pandemic levels in September. It expects strengthening demand and tightening supply across the industry to support a positive pricing environment as well as its results for a strong finish to 2020.
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US Steel Imports Down YTD as Industry Recovers from COVID Blues
U.S. steel imports are down year over year for the first ten months of 2020 despite a spike in volumes on a monthly comparison basis in October — according to the latest American Iron and Steel Institute ("AISI") report.
Imports Rise in October But Remain Lower YTD
The association of North American steel makers noted that total domestic steel imports rose 19.6% from the previous month in October to roughly 1.5 million net tons. Finished steel imports also went up 6.6% to around 1.24 million net tons for the reported month.
Biggest volumes of finished steel imports from offshore for October were South Korea with 146,000 net tons (up 17% from September), Japan with 78,000 net tons (up 32%), Turkey with 68,000 net tons (up 943%), Germany with 67,000 net tons (up 31%), and Brazil with 34,000 net tons (up 5%), per AISI.
Meanwhile, total and finished domestic steel imports fell 22.8% and 25.9% year over year, respectively, year to date through the end of October 2020. The AISI noted that these figures are based on preliminary Census Bureau data.
The year-to-date drop in imports reflect the impacts of the coronavirus pandemic and 25% tariff on steel imports, which the Trump administration had levied in 2018 under Section 232 of the Trade Expansion Act of 1962.
According to AISI, finished steel import market share was estimated at 18% in October. That is up from 16% a month ago. For the first ten months of 2020, finished steel import market share was estimated at 18%.
For 2020, annualized total and finished steel imports are expected to be 23 million net tons (down 17.7% year over year) and 16.3 million net tons (down 22.4%), respectively, AISI noted.
Demand Revival, Price Upswing Put Industry Back on Its Feet
The U.S. steel industry has staged a recovery after being out of favor for much of the first half, thanks to a revival in demand in key end-markets from the coronavirus-induced slowdown and a rebound in steel prices.
The pandemic led to a sharp drop in demand for steel across major end-use markets such as construction and automotive during the first half. Moreover, a slump in crude oil prices hurt demand for steel in the energy space. The pandemic-induced demand shocks also forced U.S. steel mills to curtail production with capacity utilization dropping to a multi-year lows during the first half.
However, demand for steel has picked up with the resumption of operations across major steel-consuming sectors, following the easing of restrictions. The automotive industry has rebounded strongly following pandemic-led shutdowns on the back of a strong recovery in customer demand. Notably, major U.S. automakers are ramping up production to boost lean vehicle inventories at dealerships in the wake of surging demand. The automotive rebound is driving demand for flat steel products.
Moreover, the resumption of many projects, which were stalled earlier due to labor shortages and supply chain disruptions amid the pandemic is supporting the revival in the construction sector and driving demand for long and flat steel products in this major market.
Improved end-market demand has also helped U.S. steel industry capacity utilization rate to break above the 70% level after plunging to 51.1% in May — the lowest level in many years. U.S. steel production has also picked up on an improvement in capacity utilization.
Moreover, U.S. steel prices have gained strength from the virus-led slump on an uptick in demand. The benchmark hot-rolled coil (“HRC”) prices tumbled to below the $500 per short ton level in April on concerns over the fast-growing pandemic in the United States and demand slowdown amid production shutdowns by automakers. After gaining some traction during the second quarter, steel prices again came under significant pressure in July and August on demand weakness.
However, HRC prices started to recover in September and are on an upswing since then. Prices have surged past $700 per short ton on U.S. steel mills’ back-to-back price hike actions, tight supply and demand recovery.
According to SteelBenchmarker, the benchmark prices for hot rolled band steel hit $716 per net ton on Nov 25, up roughly 4% from $686 net ton two weeks ago.
Lead times for steel delivery at U.S. steel mills remain extended, indicating healthier demand. Improving demand coupled with supply constraints due to production disruptions and mill outages are likely to lend support to HRC prices through the final quarter of 2020.
Meanwhile, U.S. steel companies delivered strong results in the third quarter on a rebound in domestic steel demand. Nucor Corporation (NUE - Free Report) last month said that its non-residential construction markets were strong in the third quarter, benefiting its downstream products unit. Moreover, recovery accelerated in the automotive market on strong customer demand. Nucor sees sequentially higher earnings in the fourth quarter, mainly due to improved pricing at its sheet and plate mills.
Moreover, Steel Dynamics, Inc. (STLD - Free Report) benefited, in the September quarter, from a strong recovery in steel demand, especially in automotive, and also saw a rebound in flat roll steel spot prices. It envisions sustained customer demand and pricing strength through the remainder of 2020 and into 2021.
Strong demand in the automotive market along with a resilient construction market also helped United States Steel Corporation (X - Free Report) to deliver better-than-expected third-quarter results. The company is seeing strong order booking in automotive and expects the momentum to continue into 2021.
Olympic Steel, Inc. (ZEUS - Free Report) also saw a steady rise in volumes as the third quarter progressed with volumes approaching pre-pandemic levels in September. It expects strengthening demand and tightening supply across the industry to support a positive pricing environment as well as its results for a strong finish to 2020.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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