Hurricane Harvey’s rainfall has wreaked havoc on Houston and the surrounding area, as floodwaters cover America’s fourth-largest city. The economy in the area will likely feel the effects of Harvey for years to come, but U.S. steel companies might have already benefited from the storm’s scope and devastation on southeastern Texas.
Houston floodwaters reached historic highs on Tuesday as rainfall surpassed 25 inches in many areas, with a least one location expected to receive over 50 inches, according to the National Weather Service.
President Donald Trump met with Texas Governor Greg Abbott in Corpus Christi, Texas as relief efforts ramped up. He and the first lady later traveled to Austin to tour an emergency operations center, according to an official White House statement.
New reports suggest that Hurricane Harvey could eventually make its way to Louisiana.
Oil production has been slowed, and even halted, off Texas’ Gulf Coast due to Harvey. Now, another major commodity could be affected as well.
Houston receives roughly 30% to 35% of all U.S. steel imports, according to KeyBanc analyst Philip Gibbs. The analyst noted that Harvey will therefore undoubtedly shake-up the U.S. steel industry, at least for the time being.
With steel imports likely curbed, if not stopped, in the Houston area, U.S. steel companies find themselves in the position to benefit as demand for steel products did not stop when Harvey reached land.
Shares of United States Steel Corporation (X - Free Report) jumped by over 2.50% on Tuesday, while Olympic Steel climbed more than 1.50%.
Nucor (NUE - Free Report) and AK Steel Holding Corporation (AKS - Free Report) both saw their stock prices rise by over 0.50%. Shares of the SPDR S&P Metals and Mining ETF (XME - Free Report) gained 0.94% on Tuesday. Steel Dynamics (STLD - Free Report) stock closed up marginally.
U.S. steel manufacturers have struggled in recent years as production and exports from China have risen, which means investors might seize on any possible sign of an uptick in U.S. steel prices or production.
Aside from Harvey, U.S. steel sector stocks might be ready to experience gains that don’t coincide with a hurricane’s devastation to a major U.S. city.
China, despite recording its 17thconsecutive monthly year-over-year jump in steel production, has seen its export rates drop dramatically. The nation exported 7 million metric tons of steel products last month, which marked a roughly 32% drop-off from the year-ago period. And Chinese net steel exports are down more than 30% overall compared to last year.
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